Money Factor Padding Explained

Q: What is the money factor in a car lease, and how does it relate to the interest rate?

A: When you lease a car, dealers don’t usually tell you the interest rate (APR) directly. Instead, they use something called a money factor, a small decimal number that’s really just a fancy way of saying “interest.” To see the true rate, you multiply it by 2,400.

Q: How do dealers pad the money factor?

A: Let’s say the bank approves you at 0.0015 (≈3.6% APR). A dealer might bump it to 0.0025 (≈6% APR) without ever saying a word. That tiny-looking change can add thousands of dollars to your lease payments over 2–3 years.

Q: What are some notes or nuances about money factor markups?

A: Markups like this are common and vary by brand, credit score, and lender policies—dealers are often allowed to add 0.0005 to 0.001 (equivalent to 1.2–2.4% APR) or more to the base "buy rate," depending on the captive finance company (e.g., Toyota Financial or GM Financial). The exact markup isn't always disclosed unless requested, and it can increase total costs by $1,000–$3,000+ on a typical $30,000–$40,000 lease, based on residual values and terms. Always ask for the base money factor and negotiate it down if possible, as top-tier credit (e.g., 720+ score) qualifies for the lowest rates.

Q: How does VINdicated help with money factor padding?

A: VINdicated flags that trick instantly so you’ll know if your “small” number really hides a big cost.