cap cost information, auto leasing, auto lease

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The Price You Really Paid 
For That Vehicle

On a lease, the gross cap cost is the effective "selling price" of a vehicle that is used to calculate monthly payments. Most of the leases written in the past did not have cap cost disclosure, so many dealers were able to charge prices that were much higher than those negotiated by customers or posted on vehicles. (This is known as the "secret price increase," a dirty trick that has also been used to steal down payments, trade-ins, and rebates.)
The following worksheet will enable you to determine the exact cap cost of a lease transaction that has no cap cost disclosure. (If you have a printer, you can make a hard copy of this page by using the "print" button on your browser.) Be sure to read the instructions for each part before writing down any numbers.

A. Total Depreciation

B. Plus Residual

C. Net Cap Cost

D. Plus Cap Reduction

E. Gross Cap Cost








A. Total Depreciation is that part of the total monthly payments that pays for depreciation, not taxes or lease (finance) charges. There are three ways to calculate this number: 1) On some lease contracts (like Wells Fargo), the "average monthly lease depreciation" may be listed. If your lease has this figure, multiply it by the number of months in the lease and write the result on line A. 2) If your lease only lists the "average monthly lease charge," subtracting that figure from the "base monthly payment" (w/o tax) will give you the monthly depreciation. Then multiply that figure by the number of months in the lease and write the result on line A. 3) On lease contracts that only list the total lease charges (like Ford), first multiply the "basic monthly payment" (w/o tax) times the number of months in the lease to get the total of basic monthly payments. Then subtract the total lease charges from the total of basic monthly payments and write the result on line A.

B. Enter the Residual figure listed on the lease. (It may be listed as "residual value," "lease residual value," or "estimated wholesale value of vehicle at end of lease term.")

C. Add the Total Depreciation (A) to the Residual (B) and put the result on line C. This figure is the Net Cap Cost, or total amount financed.

D. Cap Reduction is any combination of cash down payment, rebate, and/or trade-in allowance that reduces the net cap cost (amount financed). It does not include amounts used for the first month's payment, security deposit, or any taxes/registration fees due at lease signing. (For example, if you gave the dealer $3,000 in cash, but $1,000 of that was needed for the first payment/security deposit/taxes, then the cap reduction amount should be $2,000. If it's a "zero-down" lease, the cap reduction should be zero.) Enter the correct amount on line D.

E. Add the Net Cap Cost (C) to the Cap Reduction (D) and put the result on line E. This figure is your Gross Cap Cost, the "selling price" of the vehicle that was used to calculate the monthly payments. This figure does not include any lease (finance) charges, and it should be the same as the negotiated or advertised price that you thought you were paying.

Note: In some cases, legitimate charges may have been added to the "selling price" which would make the Gross Cap Cost higher than the negotiated (or advertised) price of the vehicle. Examples: 1) Any taxes and/or registration fees due at lease signing that were not covered by the down payment. 2) If you did not pay an acquisition fee as part of your down payment (usually $400 to $450), this may have been added to the price. (This fee does not apply to Ford Credit leases, because they have not charged "official" [disclosed] acquisition fees. Instead, Ford's acquisition fees have been hidden in their total lease charges, with no disclosure provided.) To verify whether any taxes or fees should have been charged, call several dealers in your area, or ask your state DMV/tax authorities. (It's usually a waste of time to ask the lender or car company about previous lease charges--they're not going to say that their own dealer overcharged you.)

Note to Victims of Leasing Fraud

After completing this worksheet, many people will be seeing--for the first time--the actual cap cost on a previous lease transaction. And they may have just discovered that they were victimized by a secret price increase or a "disappearing" down payment/trade-in. If you think that you were overcharged by more than 5% of MSRP on a lease, here's what you should do: Make copies of your completed worksheet, your lease contract, window sticker or other MSRP info, and a letter explaining what happened. Make sure your name, address and phone number are in the letter. Mail the copies (not the originals) to your state's attorney general/consumer protection division.


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