Money Factor Markup: How Dealers Raise Your Lease Rate

On a lease, the interest rate isn't called a rate — it's a money factor, a number like 0.00125. It looks like a technical constant nobody would think to negotiate. That's exactly why it gets marked up.

How to convert it to APR

One formula: money factor × 2400 = APR. 0.00125 × 2400 = 3%. The manufacturer's lender sets a base money factor, and the dealer is allowed to add to it — usually up to a cap set by the lender. Almost nobody asks, and that's the whole point.

What a markup costs

A $45,000 car, residual value $26,680, 36-month lease:

Money factor	APR	Base payment	Over 36 mo.
0.00125 — lender's base	3.0%	$598.49	$21,546
0.00225 — marked up	5.4%	$670.17	$24,126
Difference		$71.68 / mo.	$2,580

Base payment = depreciation + rent charge, before tax and fees.

Two and a half thousand dollars for a number that looks like a printer setting. And with money down in the deal, the markup is even harder to spot — the payment still looks fine.

The question to ask

Ask directly. The question alone moves the number more often than any haggling:

What's the base money factor from the lender, and what are you marking it up to?

Base money factors and residuals for a specific model and term can be looked up in advance — on lease forums or through a broker. Then at the dealership you compare their number with a known one instead of taking it on faith.