Why is an APR used as opposed to a Money Factor?


You finally found it: The Hands-Down Most Perfect Car Ever with all the bells and whistles you could ask for! You’re already dreaming about trips to the beach, bumping that sound system, and feeling like a beast on the road then...

BAM - reality hits, and you realize you have some major research to do before jumping into this huge purchase.

Well, you’ve come to the right place. Tri County Toyota is here to explain all the ins-and-outs of buying or leasing a vehicle, including any potentially confusing financing terms such as APR and money factor.

So relax, you’ll be able to drive that perfect car and feel informed, because we did the research for you.


Car Loans & APR


Are you looking to buy that new Toyota? If so, are you going to be taking out a loan?

If the answer is yes to both of those questions, than you’ll want to know what an APR is.

APR is the Annual Percentage Rate, or total amount of interest paid on your loan over a year.

By law, the APR on your loan must be disclosed in your contract, so you’ll always know the amount of interest you’ll be paying.

Determining if an APR is good or bad is based on your individual preferences and financial reach, so it’s a good idea to talk it out with a finance specialist.

APR versus Money Factor at Tri County Toyota in Royersford

APR versus Money Factor at Tri County Toyota in Royersford

Leases & Money Factor


Do you want to lease a new Toyota? If yes, then you’ll want to understand money factors.

Basically, the money factor is the financing rate on a lease, similar to an interest rate on a loan.

Money factors exist due to the fact that calculating interest on a lease is more complicated than on a loan, so the leasing company does the math and includes it into the lease cost. They are expressed in very small numbers, such as 0.00275.

You can convert a money factor into an APR by multiplying it by 2,400.

The money factor is rolled into the cost of your lease and not required to be disclosed in your contract, so if you want to know you have to ask.


The Difference Between and APR and a Money Factor


In short, APRs and money factors are similar in concept but used for different purposes.

APRs are used for loans, whereas money factors are used for leases. Both represent the financing or interest on your payments, but are expressed in different ways.

It’s good to know these basics while considering your next Toyota purchase.

We hope this article was helpful, but if you have any lingering questions or are ready to move forward and purchase that new Toyota, come visit our dealership at 15 D and L Drive, Royersford, PA 19468, or reach out to one of our staff.




Related Posts



 APR versus Money Factor at Tri County Toyota in Royersford

What Exactly is APR, and How Do I Know I’m Getting the Best APR?

Car loans come with plenty of paperwork, but that's why you come to a trusted dealer like Tri County Toyota ...

 APR versus Money Factor at Tri County Toyota in Royersford

When Is APR Used?

When it comes to buying a car, you want a trusted dealer that will make sure you completely understand your agreement That’s why you’ve come to ...

 APR versus Money Factor at Tri County Toyota in Royersford

What is APR and How is it Calculated?

If you’re looking to buy that new 2019 Toyota, it’s possible that you’ll be taking out a car loan. Unfortunately, it costs ...

 APR versus Money Factor at Tri County Toyota in Royersford

De-Mystifying APR: Who Can Help?

The car buying process can be mystifying, especially when it comes to car loans. It’s easy to become confused on important ...