Can’t find my interest rate on my lease contract

That’s exactly right – car lease contracts aren’t required to state the monthly payment adjusted with the interest rate you’re being charged so a lot of the time it won’t show up. Actually, if we’re being real here, leasing companies will actually never tell you the real value of your interest rate. Instead, they disclose the money factor of your lease which is essentially a convoluted way of calculating your interest rate. But that probably isn’t shown in your contract either.

Money factor is essentially a decimal number that needs to be in order to calculate your interest rate.

The formula is: Interest Rate = Money Factor x 2400

So if your money factor is .000165, then your interest rate is:

.000165 * 2400 = .396 or 3.96%

But neither the money factor or your interest rate is likely to be present on your contract. You’ll have to ask your dealer.

I’m already leasing a car – how do I figure out how much interest I’m already paying?

You can calculate it based on other parts of your leasing contract. You’re going to need the following items that should be listed in your contract:

  • Rent charge/lease charge (this is the total amount of finance charges that you’ll be paying for the duration of your lease)
  • Net cap cost (selling price after your rebates are applied expressed as a dollar amount)
  • Residual value (projected value of your car at the end of your lease expressed as a dollar amount)
  • Term (the number of months you’re leasing for)

The formula is: Interest Rate = 2400 x Rent Charge ÷ (Net cap cost + Residual) ÷ Term

Can I have an example?

Of course you can!

Let’s say…

  • Rent charge = $4,100
  • Net cap cost = $30,000
  • Residual = $1,800
  • Term = 36 months

So…

Interest Rate = 2400 x 4,100 ÷ (30,000 + 1,800) ÷ 36

Interest Rate = 2400 x 4,100 ÷ (31800) ÷ 36

Interest Rate = 9840000 ÷ 31800 ÷ 36

Interest Rate = 309.4339 ÷ 36

Interest Rate = 8.5%

Basically…

Even though interest rate can get a little sketchy, you can figure it out using the other things given in your leasing contract.

If you’re trying to figure out interest rate before you lease a car at a dealership you can ask your dealer, but they usually wouldn’t know without asking their finance manager, and then they’ll usually only tell you the money factor, in which case you’ll also have to calculate it yourself.

Keep in mind, the interest rate you will end up paying is directly correlated to your credit score, so if you’re just asking a dealer the interest rate you calculate will be an estimated number before credit is applied. It’s definitely good to know your credit before you head to a dealership so you don’t have to deal with any surprises.

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