For the purposes of this part
the following definitions apply:
(a) Act means the Truth in Lending Act (15 USC 1601 et seq.) and the Consumer
Leasing Act is chapter 5 of the Truth In Lending Act.
(b) Advertisement means a commercial message in
any medium that directly or indirectly promotes a consumer lease transaction.
(c) Board refers to the Board of Governors
of the Federal Reserve System.
(d) Closed-end
lease means a consumer lease other than an open-end lease as defined
in this section.
(e) (1) Consumer lease means
a contract in the form of a bailment or lease for the use of personal
property by a natural person primarily for personal, family, or household
purposes, for a period exceeding four months and for a total contractual
obligation not exceeding the applicable threshold amount, whether
or not the lessee has the option to purchase or otherwise become the
owner of the property at the expiration of the lease. The threshold
amount is adjusted annually to reflect increases in the Consumer Price
Index for Urban Wage Earners and Clerical Workers, as applicable.
See the official staff commentary to this paragraph (e) for the threshold
amount applicable to a specific consumer lease. Unless the context
indicates otherwise, in this part “lease” means “consumer lease.”
(2) The term does not include a lease that
meets the definition of a credit sale in Regulation Z (12 CFR 226.2(a)).
It also does not include a lease for agricultural, business, or commercial
purposes or a lease made to an organization.
(3) This
part does not apply to a lease transaction of personal property which
is incident to the lease of real property and which provides that—
(i) the lessee has no liability for the value of the personal property
at the end of the lease term except for abnormal wear and tear, and
(ii) the lessee has
no option to purchase the leased property.
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(f) Gross capitalized cost means the amount agreed
upon by the lessor and the lessee as the value of the leased property
and any items that are capitalized or amortized during the lease term,
including but not limited to taxes, insurance, service agreements,
and any outstanding prior credit or lease balance. Capitalized
cost reduction means the total amount of any rebate, cash payment,
net trade-in allowance, and noncash credit that reduces the gross
capitalized cost. The adjusted capitalized cost equals the
gross capitalized cost less the capitalized cost reduction, and is
the amount used by the lessor in calculating the base periodic payment.
(g) Lessee means a natural person who enters
into or is offered a consumer lease.
(h) Lessor means a person who regularly leases, offers to lease, or arranges
for the lease of personal property under a consumer lease. A person
who has leased, offered, or arranged to lease personal property more
than five times in the preceding calendar year or more than five times
in the current calendar year is subject to the act and this part.
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(i) Open-end lease means a consumer lease in which
the lessee’s liability at the end of the lease term is based on the
difference between the residual value of the leased property and its
realized value.
(j) Organization means
a corporation, trust, estate, partnership, cooperative, association,
or government entity or instrumentality.
(k) Person means a natural person or an organization.
(l) Personal property means any property
that is not real property under the law of the state where the property
is located at the time it is offered or made available for lease.
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(m) Realized value means—
(1) the price received by the lessor for
the leased property at disposition;
(2) the highest offer for disposition of
the leased property; or
(3) the fair market value of the leased property at the end of the
lease term.
(n) Residual value means the value of the leased property at the end of the lease term,
as estimated or assigned at consummation by the lessor, used in calculating
the base periodic payment.
(o) Security interest and security mean any interest in property that secures the
payment or performance of an obligation.
(p) State means any state, the District of Columbia, the Commonwealth
of Puerto Rico, and any territory or possession of the United States.
