Cap Cost Reduction vs Drive offs (Inceptions)

sedan
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#1

I need some clarification on this:

Let’s say I’m paying $2,000 due at signing when taking delivery of a car. Is there a difference in whether those $2k due at signing is applied as a cap cost reduction versus being applied toward inceptions?

Wouldn’t it essentially be the same thing? Let’s say inceptions are rolled into the cap cost and the $2,000 due at signing would obviously reduce that cap cost.

Would calculating the monthly payment be any different if the due at signing is going toward inceptions and vice versa? Hope I’m explaining myself correctly. Forgive my ignorance.

Just want to know if it makes a difference on how the deal is structured.

#2

When you start a lease there are certain fees that must be paid. This is typically your first payment, first years registration, upfront tax and lease acquisition.

A cap reduction(down payment) is used in addition to these fee’s strictly to lower your monthly payment.

Now there are several ways deals can be structured, the terms you are asking about do mostly boil down to the same thing. You are looking to pay $2,000 total to start a lease. As long as your contract reads amount to be paid in cash as $2,000 you should be fine.

#3

Thanks for the reply George.

Gotcha. Yeah drive offs for the current deal I’m working on is $2,000 total. Just wanted some clarification because I asked the sales manager if the $2,000 total was going toward inceptions or cap cost reduction and he told me it was cap cost reduction. Seems like everything was just rolled in to the cap cost. And the $2k down is a cap cost reduction.

But yes total due at signing for my deal is $2,000 total.

#4

No. The $2,000 DAS may include a cap reduction as well as other fees like DMV fees, taxes, and first payment. So, the DAS amount may be a mix of cap reductions and other fees. Or, it can be entirely composed of one or the other depending upon how the lease is structured.

#5

Happy to help, just make sure they don’t try to charge you any fees in addition to the cap reduction.

For example if you look at this deal on the official Lexus site. The $3,999 would be cap reduction, the deal says it excludes official fees, taxes and dealer charges. So those drive off fees would be charged in addition to your cap reduction.

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#6

Perfect. And yup I was very adamant when I said $2,000 total out of pocket due at signing. And that’s what we agreed on. So I’m good.

Just wanted to clarify if it made a difference on monthly payment if it went toward inceptions versus all the fees being rolled in and the $2k applied as a cap cost reduction.

#7

It probably makes a small taxation difference as CCR is typically taxed while inception fees like Reg, title, plates etc are not.

#8

Thanks for the input. I’m going to ask about it anyway when I go in on Saturday to sign the deal.