What is the capitalized cost on a lease?
The capitalized cost (or 'cap cost') is the price of the vehicle used to calculate your lease, much like the sale price when buying. It's negotiable. A 'cap cost reduction' is any down payment, trade-in, or rebate that lowers it. The lower the cap cost, the lower your payments.
Why it matters
Every lease has a cap cost. The key is that it should reflect a negotiated price, not full MSRP.
What dealers don't tell you
- A cap cost set at full sticker price with no negotiation.
- Add-ons and fees quietly rolled into the cap cost.
- A large cap cost reduction you'd lose if the car is totaled early.
How to negotiate it
- Negotiate the cap cost like a purchase price before discussing monthly payment.
- Ask for a line-item breakdown of everything included in the cap cost.
Worked example
"Gross capitalized cost: $34,000. Capitalized cost reduction: $3,000. Adjusted cap cost: $31,000."
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Explain my car leaseFrequently asked questions
Is capitalized cost negotiable?
Yes. The cap cost is essentially the selling price and can be negotiated down, which lowers your monthly payment.