- capitalized cost reduction
- A fancy name for a cash down payment, money you pay up front that is applied to the final purchase price of a lease. A large cap cost reduction will, of course reduce the monthly payments, but it will also negate one of the big advantages of leasing. However, if you own your present car, you may be able to use it, as a trade-in, to satisfy the cap cost reduction to start the lease. Remember, you must pay sales tax on any cap cost reduction you make. Another source of capital cost reduction may be dealer or manufacturer participation. Dealers and manufacturers will sometimes lower the cap cost or offer a rebate that reduces the cap cost. A dealer or manufacturer cap cost reduction does lower your total out-of-pocket dollars, unlike a cap cost reduction that you must pay.
Dictionary of automotive terms. 2015.
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Capitalized Cost Reduction — Any upfront payment that reduces the cost of financing. Capitalized cost reduction is generally associated with the purchase or lease of an automobile, and reduces the monthly payment owed if the vehicle is financed. Reductions can be made from… … Investment dictionary
cost reduction — See cap cost reduction capitalized cost reduction … Dictionary of automotive terms
cap cost reduction — See capitalized cost reduction … Dictionary of automotive terms
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dealer participation — The amount contributed by the dealer to reduce the final purchase price in the lease contract. Dealer participation can take the form of a rebate or simply a discount. The dealer participation is reflected in the lease contract as a capitalized… … Dictionary of automotive terms
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