How to Calculate Payment Factor

How to Calculate Payment Factor
Money factor is important for car loans.

Basic Formula

Determine the lease charge from your lease contract.

Find the term of the loan on the contract.

Divide the lease charge by the term of the loan.

Specific Formula

Add your net capital costs to the residual value of the asset. The net capital costs are the amounts you are paying for the lease. The residual value is the amount the asset is worth at the end of the period.

Multiply the amounts from Step 1 by the period the lease covers. This is your financing factor.

Divide the lease charge, from your lease contract, by the financing factor from Step 2 to find the payment factor.