For any consumer lease subject
to this part, the lessor shall disclose the following information,
as applicable:
(a) Description
of property. A brief description of the leased property sufficient
to identify the property to the lessee and lessor.
(b) Amount due at lease signing
or delivery. The total amount to be paid prior to or at consummation
or by delivery, if delivery occurs after consummation, using the term
“amount due at lease signing or delivery.” The lessor shall itemize
each component by type and amount, including any refundable security
deposit, advance monthly or other periodic payment, and capitalized
cost reduction; and in motor vehicle leases, shall itemize how the
amount due will be paid, by type and amount, including any net trade-in
allowance, rebates, noncash credits, and cash payments in a format
substantially similar to the model forms in appendix A of this part.
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(c) Payment schedule and total
amount of periodic payments. The number, amount, and due dates
or periods of payments scheduled under the lease, and the total amount
of the periodic payments.
(d) Other charges. The total amount of other
charges payable to the lessor, itemized by type and amount, that are
not included in the periodic payments. Such charges include the amount
of any liability the lease imposes upon the lessee at the end of the
lease term; the potential difference between the residual and realized
values referred to in paragraph (k) of this section is excluded.
(e) Total of payments. The total of payments, with a description such as “the amount you
will have paid by the end of the lease.” This amount is the sum of
the amount due at lease signing (less any refundable amounts), the
total amount of periodic payments (less any portion of the periodic
payment paid at lease signing), and other charges under paragraphs
(b), (c), and (d) of this section. In an open-end lease, a description
such as “you will owe an additional amount if the actual value of
the vehicle is less than the residual value” shall accompany the disclosure.
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(f) Payment calculation. In a motor vehicle lease, a mathematical progression of how the
scheduled periodic payment is derived, in a format substantially similar
to the applicable model form in appendix A of this part, which shall
contain the following:
(1) Gross capitalized
cost. The gross capitalized cost, including a disclosure of the
agreed-upon value of the vehicle, a description such as “the agreed-upon
value of the vehicle [state the amount] and any items you pay for
over the lease term (such as service contracts, insurance, and any
outstanding prior credit or lease balance),” and a statement of the
lessee’s option to receive a separate written itemization of the gross
capitalized cost. If requested by the lessee, the itemization shall
be provided before consummation.
(2) Capitalized
cost reduction. The capitalized cost reduction, with a description
such as “the amount of any net trade-in allowance, rebate, noncash
credit, or cash you pay that reduces the gross capitalized cost.”
(3) Adjusted capitalized cost. The adjusted
capitalized cost, with a description such as “the amount used in calculating
your base [periodic] payment.”
(4) Residual
value. The residual value, with a description such as “the value
of the vehicle at the end of the lease used in calculating your base
[periodic] payment.”
(5) Depreciation and any amortized amounts. The depreciation and any amortized amounts, which is the difference
between the adjusted capitalized cost and the residual value, with
a description such as “the amount charged for the vehicle’s decline
in value through normal use and for any other items paid over the
lease term.”
(6) Rent charge. The rent charge, with a description
such as “the amount charged in addition to the depreciation and any
amortized amounts.” This amount is the difference between the total
of the base periodic payments over the lease term minus the depreciation
and any amortized amounts.
(7) Total of
base periodic payments. The total of base periodic payments with
a description such as “depreciation and any amortized amounts plus
the rent charge.”
(8) Lease payments. The lease payments with a description
such as “the number of payments in your lease.”
(9) Base periodic
payment. The total of the base periodic payments divided by the number
of payment periods in the lease.
(10) Itemization
of other charges. An itemization of any other charges that are
part of the periodic payment.
(11) Total periodic
payment. The sum of the base periodic payment and any other charges
that are part of the periodic payment.
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(g) Early termination.
(1) Conditions
and disclosure of charges. A statement of the conditions under
which the lessee or lessor may terminate the lease prior to the end
of the lease term; and the amount or a description of the method for
determining the amount of any penalty or other charge for early termination,
which must be reasonable.
(2) Early-termination notice. In a
motor vehicle lease, a notice substantially similar to the following:
“Early Termination. You may have to pay a substantial charge if you
end this lease early. The charge may be up to several thousand
dollars. The actual charge will depend on when the lease is terminated.
The earlier you end the lease, the greater this charge is likely to
be.”
(h) Maintenance
responsibilities. The following provisions are required:
(1) Statement
of responsibilities. A statement specifying whether the lessor
or the lessee is responsible for maintaining or servicing the leased
property, together with a brief description of the responsibility;
(2) Wear-and-use standard. A statement of the
lessor’s standards for wear and use (if any), which must be reasonable;
and
(3) Notice of wear-and-use standard. In a motor
vehicle lease, a notice regarding wear and use substantially similar
to the following: “Excessive Wear and Use. You may be charged for
excessive wear based on our standards for normal use.” The notice
shall also specify the amount or method for determining any charge
for excess mileage.
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(i) Purchase option. A statement of whether
or not the lessee has the option to purchase the leased property,
and:
(1) End of lease term. If at the end of the lease term, the purchase
price; and
(2) During lease term. If prior to the end
of the lease term, the purchase price or the method for determining
the price and when the lessee may exercise this option.
(j) Statement referencing
nonsegregated disclosures. A statement that the lessee should
refer to the lease documents for additional information on early termination,
purchase options and maintenance responsibilities, warranties, late
and default charges, insurance, and any security interests, if applicable.
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(k) Liability between residual
and realized values. A statement of the lessee’s liability, if
any, at early termination or at the end of the lease term for the
difference between the residual value of the leased property and its
realized value.
(l) Right of appraisal. If the lessee’s liability at early termination
or at the end of the lease term is based on the realized value of
the leased property, a statement that the lessee may obtain, at the
lessee’s expense, a professional appraisal by an independent third
party (agreed to by the lessee and the lessor) of the value that could
be realized at sale of the leased property. The appraisal shall be
final and binding on the parties.
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(m) Liability at end of lease term based on residual
value. If the lessee is liable at the end of the lease term for
the difference between the residual value of the leased property and
its realized value:
(1) Rent and
other charges. The rent and other charges, paid by the lessee
and required by the lessor as an incident to the lease transaction,
with a description such as “the total amount of rent and other charges
imposed in connection with your lease [state the amount].”
(2) Excess liability. A statement about a rebuttable presumption
that, at the end of the lease term, the residual value of the leased
property is unreasonable and not in good faith to the extent that
the residual value exceeds the realized value by more than three times
the base monthly payment (or more than three times the average payment
allocable to a monthly period, if the lease calls for periodic payments
other than monthly); and that the lessor cannot collect the excess
amount unless the lessor brings a successful court action and pays
the lessee’s reasonable attorney’s fees, or unless the excess of the
residual value over the realized value is due to unreasonable or excessive
wear or use of the leased property (in which case the rebuttable presumption
does not apply).
(3) Mutually agreeable final adjustment. A
statement that the lessee and lessor are permitted, after termination
of the lease, to make any mutually agreeable final adjustment regarding
excess liability.
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(n) Fees and taxes. The total dollar amount
for all official and license fees, registration, title, or taxes required
to be paid in connection with the lease.
(o) Insurance. A brief identification of insurance
in connection with the lease including:
(1) Through the
lessor. If the insurance is provided by or paid through the lessor,
the types and amounts of coverage and the cost to the lessee; or
(2) Through a third party. If the lessee must
obtain the insurance, the types and amounts of coverage required of
the lessee.
(p) Warranties or guarantees. A statement identifying all express
warranties and guarantees from the manufacturer or lessor with respect
to the leased property that apply to the lessee.
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(q) Penalties and other charges for delinquency. The amount or the method of determining the amount of any penalty
or other charge for delinquency, default, or late payments, which
must be reasonable.
(r) Security interest. A description of any security interest, other
than a security deposit disclosed under paragraph (b) of this section,
held or to be retained by the lessor; and a clear identification of
the property to which the security interest relates.
(s) Limitations on rate information. If a lessor provides a percentage rate in an advertisement or in
documents evidencing the lease transaction, a notice stating that
“this percentage may not measure the overall cost of financing this
lease” shall accompany the rate disclosure. The lessor shall not use
the term “annual percentage rate,” “annual lease rate,” or any equivalent
term.
(t) Non-motor
vehicle open-end leases. Non-motor vehicle open-end leases remain
subject to section 182(10) of the act regarding end-of-term liability.
