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      09-21-2015, 09:36 PM   #1
typewx
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Need help understanding Money Factor

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I did research online and I keep seeing these really low number such as 0.0013 or something like that but when I talk to my dealership, they tell me 1.01 Money factor.... How does this works?

1.01 x 2400?

1.01/2400??

help? thanks
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      09-23-2015, 10:57 AM   #2
aerostar
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1.01 makes no sense as a money factor as it's way too high.

You just take whatever the money factor is and multiply it by 2400. It's the interest rate.

If they were giving you a 1.01 money factor then your interest rate would be 2,424%.
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      09-24-2015, 10:18 PM   #3
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e.g., .0013*2400 = 3.12% interest rate
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      09-25-2015, 03:33 AM   #4
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It would be much simpler if they just gave the interest rate, full stop. Don't need another metric that tells you the thing.
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      09-25-2015, 05:40 AM   #5
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Quote:
Originally Posted by Railgun View Post
It would be much simpler if they just gave the interest rate, full stop. Don't need another metric that tells you the thing.
They will do anything to make the number sound less
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      09-29-2015, 08:18 PM   #6
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Lease Terms
Lender BMW Financial Services
Term 36 Months
Mileage 10,000/year
Money Factor 1.3
Residual Factor 66%

so what is the interest rate then? I got this straight off a quote from bmw dealership
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      09-29-2015, 08:25 PM   #7
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Quote:
Originally Posted by typewx View Post
Lease Terms
Lender BMW Financial Services
Term 36 Months
Mileage 10,000/year
Money Factor 1.3
Residual Factor 66%

so what is the interest rate then? I got this straight off a quote from bmw dealership
I'm guessing they actually meant .00130 which is the base MF for some of the programs right now.
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      09-29-2015, 08:32 PM   #8
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Agree. Think they added 3 decimal points to make it a positive number or....to make our little brains subconsciously think '1.3% APR! What a deal....'
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      10-02-2015, 07:29 PM   #9
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Quote:
Originally Posted by Dabozo View Post
Agree. Think they added 3 decimal points to make it a positive number or....to make our little brains subconsciously think '1.3% APR! What a deal....'
That's exactly what they did - make it "look" like something it isn't and then the buyers, most of which don't know much about "arithmetic," run around afterwards telling their friends what a great interest rate they got (and what stellar negotiators they are)
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