The capitalized cost generally refers to the agreed upon selling price of a car, which is then used to calculate the monthly car lease payment. More specifically, the capitalized cost can refer to the “gross capitalized cost” or the “net capitalized cost.” The net capitalized cost is also known as the “adjusted capitalized cost.”
The gross capitalized cost is the agreed upon value of the vehicle (selling price) plus any additional fees or options that have been added. These fees could also include the acquisition fee.
The net capitalized cost is the gross capitalized cost minus the capitalized cost reduction. The capitalized cost reduction is the portion of the money that a lessee pays at the signing of a lease that is used toward lowering the gross capitalized cost. A higher capitalized cost reduction leads to a lower net capitalized cost and a lower net capitalized cost leads to lower monthly payments.