For the purposes of this part
the following definitions apply:
(a) Act means the Truth in Lending Act (15 U.S.C. 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) Bureau refers to the Bureau of Consumer Financial Protection.
(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 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.
