The capitalized cost is the purchase price of the vehicle. This will sometimes be referred to as "Cap Cost".
You may have heard of MSRP (Manufacturer's Suggested Retail Price) - this is just the list price of the vehicle to a customer. It is not necessarily what you will ultimately pay for the car, but simply a guideline to help set a precedent for what a new car is worth. Do not let the dealer tell you that the Capitalized Cost is not important in a lease - it is VERY important!
You will want to find and negotiate the lowest cap cost that you can for your vehicle, just as if you were buying your car with cash. The lower your capitalized cost, the lower your payment will be. When you finally settle on the purchase price of your vehicle, you will see this final amount represented as the "Cap Cost Reduction" - this is just the difference between what the car was offered for and what you agreed to pay for it.
Back to Which Terms Do I need to be Familiar With
