What is a cap cost reduction?

A cap cost reduction is anything that lowers the amount being leased, such as a cash down payment, manufacturer rebates or trade-in equity. It lowers your monthly payment, but putting a lot of cash down on a lease is risky: if the car is totaled or stolen early, that money is generally not returned, even with GAP coverage. Many people prefer a smaller payment boost over a large down payment for that reason.