Capitalized Cost
Also known as: Cap Cost, Gross Cap Cost, Adjusted Cap Cost, Lease Price
The capitalized cost is the total amount being financed in a lease — the lease equivalent of a purchase price. The gross cap cost starts at the negotiated selling price; the adjusted cap cost is after subtracting lease cash, trade-in equity, and down payment.
How Capitalized Cost Works
Gross cap cost = negotiated selling price + acquisition fee + any taxes/fees rolled in. Adjusted cap cost = gross cap cost - cap cost reductions (lease cash, trade-in equity, down payment, rebates). Your monthly payment is calculated on the adjusted cap cost. Negotiating a lower selling price directly reduces the cap cost, which lowers your monthly payment.
Example
Vehicle MSRP $45,000. Negotiated price $43,000 + $650 acquisition fee = $43,650 gross cap cost. With $2,000 lease cash and $3,000 down payment: adjusted cap cost = $38,650.
Frequently Asked Questions
How do you lower the capitalized cost?
Negotiate a lower selling price, apply manufacturer lease cash, increase your down payment, or trade in a vehicle with positive equity. Each dollar reduction in cap cost saves approximately $0.028 per month on a 36-month lease.
What is the difference between gross and adjusted cap cost?
Gross cap cost is the starting amount: negotiated price + fees. Adjusted cap cost is after subtracting cap cost reductions: lease cash, trade-in equity, and down payment. Your monthly payment is calculated from the adjusted cap cost.
Related Lease Terms
A money factor is the interest rate on a car lease expressed as a small decimal.
Residual ValueResidual value is the projected worth of a leased vehicle at the end of the lease term, expressed as a percentage of MSRP.
Lease CashLease cash is a manufacturer incentive that reduces the capitalized cost of a lease, lowering the monthly payment.
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