In leasing, the gross capitalized cost is similar to the retail financing term known as the “cash price.” Both terms refer to the total cost of the vehicle or asset being financed.
The gross capitalized cost in leasing includes the vehicle’s selling price along with any additional charges, such as taxes, fees, and optional equipment. It is the total amount that the lessor (or leasing company) is financing and on which the lease payments are calculated.
Similarly, the cash price in retail financing refers to the total amount a buyer pays for a vehicle or asset in cash or through financing. It includes the selling price of the item, as well as any applicable taxes, fees, and extras. The cash price is the basis for calculating loan payments in retail financing.
1. What is the difference between gross capitalized cost and net capitalized cost?
The gross capitalized cost includes all costs and fees associated with leasing, while the net capitalized cost is the adjusted cost after subtracting any down payment, trade-in value, or rebates.
2. Can the gross capitalized cost be negotiated?
Yes, the gross capitalized cost can be negotiated, just like the purchase price of a vehicle. Negotiating a lower cost can result in lower monthly lease payments.
3. How is the gross capitalized cost determined?
The gross capitalized cost is determined by the selling price of the vehicle or asset, along with any additional charges and fees. It is typically provided by the lessor or leasing company.
4. Are taxes and fees included in the gross capitalized cost?
Yes, taxes and fees, such as registration fees and documentation fees, are included in the gross capitalized cost in leasing.
5. Can the gross capitalized cost be financed?
Yes, the gross capitalized cost is the amount financed in a lease. It is divided into monthly payments over the lease term.
6. Does the gross capitalized cost affect the residual value?
Yes, the gross capitalized cost affects the residual value of the vehicle or asset. A higher gross capitalized cost will result in a lower residual value and vice versa.
7. Can the gross capitalized cost be reduced during the lease term?
The gross capitalized cost is typically set at the beginning of the lease term and cannot be reduced unless negotiated with the lessor. However, you can negotiate to lower the cost of future lease terms.