Capitalized Cost Reduction

This...is a down payment.

It’s called a capitalized cost reduction because someone paid a lawyer $350 per hour to confuse people when they look at legal contracts. Now, guys in ties who work at auto dealerships and mortgage branches tell women at bars that “In the biz, we call them ‘capitalized cost reductions.’”

You know that guy. His name is Gary, and he’s shooting hard for middle management.

So yeah...a capitalized cost reduction is pretty much just a down payment, a cash sum when buying a home or trading in a used car when buying a new one. You can argue that the definition counts if you’re using rebates to buy a durable good, or even signing a longer lease to get a lower rent.

This is how you lower financing and principal payments. Pay more money up front...pay less in financing or a lower lease price on a car or home.

Now go tell Gary to refill the coffee pot.