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FINANCE

Adjusted Cap Cost vs. Cap Cost

Cap cost = the negotiated vehicle price (pre-incentives). Adjusted cap cost = cap cost minus [cap cost reduction](/glossary/cap-cost-reduction) and applicable rebates.

// Why it matters

On a lease, the gross cap cost is the agreed-upon vehicle price before any rebates or down payment — equivalent to the negotiated selling price on a financed deal. The adjusted cap cost is the gross cap cost minus any cap cost reduction (down payment), minus applied manufacturer incentives (lease cash, conquest cash, loyalty), minus any trade-in equity. The adjusted cap cost is the actual financed amount used in the monthly payment calculation: (adjusted cap cost minus residual value) divided by the lease term, plus interest charges on the average of cap cost and residual at the money factor. Always negotiate the gross cap cost FIRST as if you were buying, then layer rebates and cap reduction on top. Negotiating directly on adjusted cap cost lets the dealer hide markup in the gross figure.

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