Leasing a car might be tricky if you are not aware of the lingo that is used by the car dealers. The lingo might confuse you. Imagine if you want to do a BMW X7 lease and the car dealer starts mentioning the things like BMW lease money factor. You might end up making the conversation short and sign a deal that will surprise you.

The following paragraphs give more details on to lease a car. Some highlights include factors that can help you to spot a good lease, money factors, and more.

You will know how to calculate the money factor and interest rate and more on car lease money factor. Let’s dive in and learn more on car leasing so to do the BMW i3 lease, BMW i8 lease, BMW x7 lease, and more.

## What Is A Lease Money Factor?

Before defining the lease money factor, it is important to start by defining other keywords such as a lease and money factor separately. A lease is a contract that outlines the terms and conditions of an asset of a property that will be rented by someone else.

The terms may include a payment plan, rent timeframe, and more. Property that you can rent includes houses, vehicles, and other assets.

Then the money factor is good as the interest rate that you pay for a lease. For instance, it can be the interest rate that can be paid under the lease period. The money factor is also known as the lease fee or the lease factor.

Therefore, the lease money factor is the interest rate of the property that you would be renting. For instance, if you rent a BMW car; you will likely have to know about the BMW lease money factor.

Before even renting or leasing the BMW car, you should research the current BMW money factor. And make sure that you research the type of car that you want to lease.

### What Is A Good Lease?

Below are some things that determine a good lease

### Fees structure

The dealership lease contract comes with a lot of fees attached to it. As such, if you are good at negotiating, you can ask for some other fees to scrap from the contract so that you have low fees.

Some fees include acquisition fees, security deposit, disposition fee, and many others can include in the lease. But, such fees can be waived. Therefore, if possible you should negotiate for a favorable deal based on the fees.

### High Residual value

Residual value is the value of an asset at the end of the lease period. The residual value is more of a prediction figure. Therefore, the residual value must be high.

High how?

A high residual percentage means that the lease payment will be lower. The release value is highly driven by the vehicle’s selling price and the residual figure. This is how it works;

Let’s say that the car selling price is $10,000 and the residual percentage is 70% after 24 months. Then the other one has a residual percentage of 30 percent after 24 months. Let’s do the calculations:

**Example 1**:

Selling price = $10,000

Residual percentage = 70%

This means that the residual price is 70% of $10,000 = $7,000

Then $10,000 – $7,000 = $3,000

The lease payment per month is $3,000/24 months = $125

**Example 2:**

Selling price = $10,000

Residual percentage = 30%

This means that the residual price is 30% of $10,000 = $3,000

Then $10,000 – $3,000 = $7,000

The lease payment per month is $7,000/24 = $292

Therefore, the above examples show that with high residual fee, you will definitely pay a low amount of lease.

### Customer retention

This is another thing that you should take into consideration. Higher customer retention can be another way that shows that there is a good lease deal. Customer retention is the ability of the company in retaining its customers. A lot of incentives such as discounts may use to keep the customers coming back.

## How Money Factor To Interest Rate Calculate?

You can convert the money factor to an interest rate. Interest rate is a percentage of the amount charged for an asset by a lender to a borrower. The borrower is the one who pays the interest rate to the lender.

To convert the money factor to the interest rate, you will have to multiply the money factors figure by 2,400. With the interest rate figure, you can also calculate the money factor figure by dividing by 2,400.

- For example, if the money factor of a car is 0.001; the interest rate is:

0.001 x 2,400 = 2.4%

## What Is A Good Money Factor For Lease?

A good money factor for a lease means that it’s the money that you will be paying for renting an asset or property. Therefore, the rent money must at least tally with the type of property that you are renting. As such, the money factor must not strain you for a bad-conditioned property. The money factor formula is

- Money factor = lease charge ÷ (capitalised cost + residual value) x lease term

### Low Money Factor

Having a low money factor for your lease might show that you are having a good deal. The money factor is usually in a different format from an interest rate.

The interest rate come as a percentage. Then the money factor as a number like 0.00112. If the money factor figure is bigger, it means that the interest rate will be bigger. Therefore, you should check the money factor figure to spot a good deal.

## Convert Money Factor To Interest Rate

As discussed above, converting a money factor to interest is possible. For instance, if the property you are leasing has a money factor of 0.0032; you can calculate the interest rate as follows;

Interest rate = money factor x 2,400

= 0.0032 x 2,400

= 7.68 %

## What Is The Difference Between Money Factor Vs Interest Rate?

Money factor and interest rate mighty save the similar purpose in the lease, but they will present differently. The money factor figure is usually presented as a decimal format; something like this 0.00112. Then an interest rate usually presents as a percentage like 6%.

Interestingly, the money factor definition has been repeated several times in the above paragraphs. The money factor and the interest rate are the same.

The money factor is meant to determine the interest of the borrower’s lease payment. And this means that the money factor is the interest rate that the borrower has to pay during the lease period.

## What Is A Good Money Factor When Leasing A Car?

When leasing a car, the money factor or the interest rate that you will be paying should be affordable. Or it must at least fall within your budget. However, there are some factors that you may consider determining a good money factor when leasing a car.

The money factor must be low. A low money factor means that your interest rate will be low. Therefore, that may mean good news if you are a borrower.

## What Is The Money Factor On A Lease?

The money factor is good as the interest rate of the property that you are leasing. For instance, to calculate the money factor of the property that you are leasing; you can use the following formula;

Money factor = lease charge ÷ (capitalised cost + residual value) x lease term

For instance, a bmw x1 lease money factor can be as follows. NOTE that these figures are not the exact value of the mentioned car, and they may differ from place to place.

Money factor =

=

=

= 0.00024

The capitalized cost is also known as the lease cost. It is the price of the agreed property on lease. The lease term is the length or period in months in which the property will be leased.

## Lexus Residual Value And Money Factor

If you want to lease a Lexus car, the residual value and money factor depend on various factors. Some of the things that influence the residual value and money factor figures may include the location, type of Lexus, mileage, car dealer, and more.

A Lexus RX 350 of the 2020 version has a money factor of 0.00055 and a residual value of 57% in New York. However, these figures may differ due to various factors.

## Final Thoughts

Leasing a car is an interesting process and at the same time a confusing one. If you are not too familiar with things like the car lease money factor, you might settle for an expensive deal. Therefore, you are leasing a BMW car of your choice; you should at least research the BMW lease money factor. This will make the leasing process more interesting.

In addition, knowing about the BMW lease money factor will make it easy to spot a good deal. Not all the BMW lease money factor is the same, different car dealers give various figures. Therefore, knowing the leasing lingo will be advantageous if you are a borrower.

Are you in a good position to lease a BMW car of your choice now? Share your thoughts and experiences below.