Incentive Program Types
Program Type

Description

Acquisition Fee

Sometimes called a bank fee or administrative fee, this is a fee thatleasing companies charge to arrange the lease. This fee is typicallybetween $395 - $895, depending on the vehicle and leasing
company. Note that acquisition fees can be bundled into themonthly lease payment, or paid up-front.

Bonus CashA cash incentive offered by manufacturers that may be combinedwith all other programs.

Cap Cost Reduction

The term, capitalized cost reduction, or “cap cost reduction,” refers
to any cash down payment, trade-in credit, or rebate amount thatdecreases, or reduces, the amount being financed (capitalized cost).
It’s the same as a down payment when buying with a loan, just a
different name. Cap cost reduction is not a security deposit that you
get back at the end of a lease. It’s simply a form of prepayment of
the amount owed on the lease, which serves to reduce the amountof the monthly payment. A cap cost reduction (down payment) issometimes required to get a specific promotional lease deal. It isalso sometimes required if a customer has poor credit.

Capitalized Cost

The capitalized cost, or “cap cost“, related to car leasing, refers to
the amount that is being financed with a lease. The lower thecapitalized cost, the lower the monthly lease payment. Cap cost
includes the negotiated price of the vehicle plus any add-on fees ortaxes that will be financed (not paid in cash). It might also include
the balance of a previous loan on a trade-in vehicle.

Captive Finance
Bonus CashA cash incentive offered by manufacturers that may be used onvehicles that are financed or leased through its captive financecompany. This cash may be combined with normal consumer cash if
the vehicle is financed using the captive finance company’s standard
interest rates.

Cash + APR %Special financing rates that may be combined with consumer cash.
Frequently the cash that these rates are compatible with is lower
than the stand alone consumer cash that is being offered.

Consumer CashA public-facing cash incentive that is provided on retail sales of avehicle by the manufacturer that is not compatible with the special
financing or lease offers.

Consumer Lease CashConsumer cash that may be used to reduce the capitalized cost ofvehicles that are leased through captive finance companies.

Consumer Rebate +APR

Consumer cash that may be combined with the Cash + APR% rates.

Conquest Promotion

A cash incentive that is available to current owners of competitivemodels. Some conquest cash programs are available to owners of
any other manufacturers’ products, while other programs only areavailable to current owners of a select list of models.

Dealer CashA cash incentive that is provided by a vehicle’s manufacturer todealers to use as they please. This type of incentive is rarelyadvertised. Dealer cash is compatible with all other special financing
and consumer cash promotions unless otherwise noted.

Dealer Lease Cash

Dealer cash that is available on vehicles that are leased through the
manufacturers’ captive finance companies.

Dealer Volume Bonus

Also commonly referred to as a dealer stairstep program. Dealer
volume bonus programs provide dealer cash to dealers based upon
the percentage of a predetermined sales objective that they achieve
or based upon the number of units that they sell during a specificperiod of time. Volume bonuses are compatible with all otherpromotions unless otherwise noted.

Gross Cap Cost

In car lease contracts, the sum of everything included in thecapitalized cost is called “gross capitalized cost.” This includes thecost of vehicle plus any other costs to be financed in the lease. After“cap cost reductions” (see below) have been subtracted, it becomes“net capitalized cost.”

Lease Loyalty

A cash incentive that is available to current owners of the brand or
manufacturer’s products who lease a new vehicle through its captive
finance company. Some lease loyalty programs require that theconsumer is actually leasing their current vehicle through the captive
finance company.

Lease Money Factor

A number, published by banks that is used to calculate the interest
portion of vehicles’ monthly lease payments. It is usually displayedin the form of a five digit decimal, i.e., .00275. A money factor canbe converted into an approximate interest rate equivalent by
multiplying it by 2400.

Lease PurchaseOption

End-of-term purchase price aka residual value for the vehicle used inthe manufacturer's official advertised lease payment.

Lease Rate

Some banks publish lease rates instead of money factors for thevehicles that they lease. These rates are expressed in the form of apercentage, i.e., 3.50%. The two most prominent lending
institutions that use lease rates instead of lease money factors are
General Motors Acceptance Corp. and Ford Credit. Lease rates canbe converted into approximate money factor equivalents by dividingthem by 2400.

Lease Residual Value

Residual values are numbers that are published by banks that areused to calculate the depreciation portion of vehicles’ lease
payments. They are usually expressed as a percentage of vehicles’
full MSRPs, including destination charges, plus the MSRPs of any
options that may be residualized.

Net Capitalized Cost

The net cap cost refers to the price of a vehicle, subtracting any
manufacturer’s discounts and customer down payments from themanufacturer’s suggested retail price. What this really means is thatthe net cap amount is the amount that is actually being financedwith the lease. This amount usually, though not always, includes thesales tax on the vehicle and may include other fees, as well.

Purchase Loyalty

A cash incentive that is provided to the current owners of the brandor manufacturer’s products if they purchase a new one.

Sales Manager CashA cash incentive that is provided to dealership sales managers forthe sale of a particular vehicle. Sales manager cash often comes in
the form of an “override” percentage to a salesperson cash program.
In these instances sales managers would receive a percentage of thetotal salesperson cash that was provided to their dealership.

Sales Rep CashA cash incentive that is provided to dealership salespeople for thesale of a particular vehicle.

Stand Alone APR %A subsidized finance rate that cannot be combined with any standalone consumer rebates that are being offered, but may be
combined with bonus cash and captive finance company bonus cash.

Stand Alone
Consumer Rebate

A cash incentive that is provided to consumers who pay cash fortheir vehicles or finance / lease them through an independent bank.
Stand alone consumer cash cannot be combined with any special
financing or lease rates that are being offered through captive
finance companies.

Supported ResidualValue

Some banks artificially inflate their vehicles’ normal residual values
to provide consumers with low monthly payments. These higher
than normal residual values are known as supported residual values.

Termination Fee

Lease termination fee, aka disposition fee that is being charged on
the manufacturer's official advertised lease price point.