If leasing a vehicle is in your future, be aware that you’re entitled to certain legal protections. Leasing companies are bound by the Consumer Leasing Act (Regulation M), which means that they must tell you all of the terms and costs of the deal they are offering you. So be prepared to ask the right questions to ensure that your lessor is following legal regulations.
What is an auto lease?
An auto lease is a contract that essentially allows you to rent a car for a specified amount of time. With this contract comes rules for your time with the car, such as mileage restrictions, the types of insurance accepted and how much damage is acceptable.
You can sign up for a lease at many car dealerships. For people who don’t drive much or who don’t want to commit to one car for more than a few years, leasing could be a good alternative to buying.
What must be disclosed to you when you sign a lease?
Under the Consumer Leasing Act and the Truth-in-Lending Act, lessors are required to provide you with basic information about your lease. Here is a list of what to look for in your lease agreement to ensure that your lessor is following leasing laws:
- Total lease amount: Before you sign a lease, you must be given a detailed, written statement of everything you have to pay or may have to pay.
- Lease duration and payment due dates: The leasing company must tell you how many payments you have to make, how much each payment will be and when the payments are due.
- Extra fees: You must be told about any upfront money you have to pay, such as down payments, registration and security deposits, as well as how much you’ll pay if a payment is late.
- Lease-end requirements: The lessor must explain any circumstances under which it could terminate the lease. It should also explain what will happen if you decide to buy out the lease.
- Vehicle maintenance requirements: You must be told how wear and tear will be assessed when you return the vehicle and under what circumstances you’ll need to pay damages. The lessor should also tell you who is responsible for servicing the car.
- Insurance requirements: You must be given details about lease requirements, such as a specific type of amount of car insurance.
The bottom line
Leasing a vehicle can be a good financial investment, but make sure that you understand the ins and outs of leasing laws to get the best deal available. If your lessor tries to hide any terms of your lease or refuses to disclose things like your total payment amount and potential fees, it’s best to turn to a different dealership.