Capitalized Cost.

In plain English

Capitalized cost (often shortened to cap cost) is the price of the vehicle you are leasing, plus any extra fees or add-ons rolled into the lease. It works like the purchase price does on a loan: it is the starting figure the lender uses to calculate your payment. A down payment, trade-in, or rebate reduces it, and that reduced number is called the capitalized cost reduction. A lower cap cost means a lower monthly payment, so it is the one number worth negotiating before you ever look at the monthly figure.

01Why it matters

Dealers often steer you toward a comfortable monthly payment while quietly setting a high cap cost, so two leases with the same payment can cost very different amounts overall. Negotiating the cap cost down is how you actually save money on a lease.

02The math, step by step

A car has a sticker price (MSRP) of $35,000. You negotiate the capitalized cost down to $32,000 and put $2,000 down as a cap cost reduction, leaving an adjusted cap cost of $30,000. Your monthly payment is calculated from that $30,000 figure, not the $35,000 sticker.

03What this is NOT

04Receipts

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