- 1). Locate the monthly interest rate for the auto in question. You can do this by calling the car dealership or by reading the fine print of the advertisement, if you found your car there.
- 2). Divide the interest rate by 2,400, keeping in mind not to convert it to a decimal beforehand. For example, an interest rate of 5 percent can be expressed as a money factor of .0021. Conversely, you can multiply a money factor by 2,400 to determine monthly interest on a vehicle. This conversion factor is constant, no matter the term of your lease.
- 3). Use your money factor to compute the amount of interest contained in the monthly payments the dealership or advertisement quoted you. Add the price of the car to its "residual value," then multiply that sum by the money factor. Consider a car priced at $25,000 and with a 60 percent residual value. After computing the numerical residual value ($15,000), add it to the price of the car to get $40,000. Multiply this number by your sample money factor (.0021) to discover that you would be paying $84 per month in interest on this hypothetical car.
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