Long story short. Leased a ZDX Type-S. Dealer sneaked $1,000 in capitalized costs (Tire and Wheel warranty). I had them cancel it and was supposed to go towards my last payments since it was already funded.
I checked with AFS and they listed the refund as a security deposit.
Am I getting screwed here?
How did they sneak in $1k without you noticing? Were the numbers you signed for what you agreed upon?
As I said, long story. AFS made a mistake and we had to redo the whole contract, spent almost 6 hours signing and at some point they told me about a discounted warranty. The guy showed me how it only increased my payment by $11/ month, which seemed like a decent deal at 9 PM, for the amount of protection.
Typical case of being tired in to signing 
Believe me next morning I was kicking myself.
Got it, so this wasn’t what you originally agreed to, makes more sense now.
As for this, they are acknowledging some kind of refund? Sounds like you need to get clarification directly from the lender.
Yes, they refunded the full amount of the capitalized cost. In my mind, having it as a security deposit makes no sense since the loan is funded and it does not bring down my MF or any other benefit, but at the end of the lease they could keep that for “damages”. It would be better if it went towards the last payments right?
If there are damages at the lease end, you’re paying for them regardless. Makes no difference here.