What does "capitalized cost reduction" mean?

What does "capitalized cost reduction" mean?

James Bell (Publisher, Auto Reviewer) gives expert video advice on: What does "balloon payment" mean?; What does "base value" mean"?; What does "buy here, pay here" financing mean? and more...

Capitalized cost reduction can really come from two different places. Firstly, if you're doing a trade in or writing a down payment against the vehicle, that can reduce the overall price of the vehicle. That is probably the cleanest, easiest way. Capitalized cost reduction can also come from the manufacture itself providing additional funding, such as rebate or incentive program to take down the price. Capitalized cost reduction is either going to come from additional down payment, from additional money on the hood or the rebate from the manufacture. However, it is important to keep in mind that trading in a vehicle is going to get you the least amount of money for your used car. You may be better served to take it out to the market and sell it privately, and then take that profit from the sale and apply that directly to your new loan on your new car to reduce the capitalized cost.