Motor Vehicle Leasing Rights

Whether to buy or lease a motor vehicle is one of the most important decisions faced by consumers. With the average new vehicle costing over $20,000, it is also a major financial decision.

New York was the first state in the nation to require comprehensive lease disclosures. The law governs all leases entered into in New York after August 31, 1995 and gives consumers important legal rights. This brochure explains the key provisions of the law, which New York Attorney General's office and the Greater New York Automobile Dealers Association (GNYADA) supported in order to help consumers understand leasing better.


Leasing a Vehicle

The major purpose of the Motor Vehicle Retail Leasing Act (MVRLA) is to insure that you are able to compare lease offers of competing lessors and that you are treated fairly throughout the lease transaction.

Shopping for a Lease

The New York law makes shopping for a new lease much easier because of the important information which must be disclosed to you in every lease. The law requires consumer leases to disclose the following items:

Capitalized cost: This is the amount agreed upon at the beginning of the lease by you (the lessee) and the dealer/leasing company (the lessor) for all items and services included in the lease. The capitalized cost is comparable to the selling price of the vehicle plus all related goods and services. These may include: insurance, warranties, registration fees and taxes.

Adjusted capitalized cost: The adjusted capitalized cost is the capitalized cost minus any downpayment, manufacturer's rebate or trade-in allowance. The adjusted capitalized cost is much like the amount financed in an installment sale. The adjusted capitalized cost is the amount which serves as the basis for determining your monthly lease payment and your obligation at early termination.

Estimated residual value: This is the value of the vehicle at the end of the lease projected by the dealer/lessor. Your purchase option may differ.

The adjusted capitalized cost and the residual value determine the depreciation portion of your monthly payments. Be sure to compare the annual mileage on which the residual value is based.

Additional early termination charge: This amount plus the actuarial lease balance determines the maximum early termination charge. This disclosure permits you to compare the early termination charges of different leases. If no additional early termination charge is disclosed, then the lessor cannot charge any amount above the actuarial lease balance (other than any past due payments or other amounts you owe.)

Be sure to ask for these amounts when shopping for a lease. When making your lease decision, compare these disclosed amounts along with the comparison of the monthly payment, total lease charges, mileage allowance, excess mileage charges, purchase option and other key lease features.

Key Consumer Protections

The New York Auto Leasing Law, provides important consumer protections before, during and at lease termination.

Protections Before Entering the Lease

  • Upon request, the lessor must provide you with a sample lease agreement. The lessor must also post a sign stating that a sample lease agreement is available upon request.
  • If you make a payment prior to lease signing, you are entitled to a refund if your application is not approved. Other protections apply if your vehicle is held as a trade-in by the lessor pending execution of the lease.
  • The lessor must provide a separate notice in the event you are responsible for any early termination deficiency (gap) if your vehicle is stolen, confiscated or damaged and declared a total loss by your insurance company. Coverage does not include vehicle confiscation. The lessor must offer gap protection to cover this potential liability, at its actual cost plus an administrative fee of not more than $10, or provide this coverage at no additional charge.

Protections during the Lease Agreement

  • The printed lease form must be labeled "LEASE AGREEMENT," "RETAIL LEASE AGREEMENT" or "MOTOR VEHICLE LEASE AGREEMENT".
  • The lessor is required to give you a completely filled in and executed copy of the lease when you sign it. Until you receive it, you have an unconditional right to cancel the lease.
  • You have a ten day grace period on all monthly payments before a late charge may be assessed.
  • If you default, you have a right to reinstate the lease once during the lease term if the reason is limited to late payments. You must be notified of the amount necessary to reinstate the lease and be given at least 25 days to do so.
  • The lessor must give you an accounting of the payments you have made and those remaining to be paid and must provide an early termination payoff amount without charge upon your request.
  • You have the right to terminate the lease at any time after 50 percent of the scheduled lease term, and if your obligations are current.
  • The lease must contain an excess wear and damage definition that advises you of your obligation to return the vehicle in proper mechanical and physical condition.

Limits on Early Termination Charges

If you terminate the lease early, the law limits the amount which the lessor can charge you.

  • If you return the vehicle, before full lease term, the lessor may not charge you for any excess mileage.
  • The lessor may only charge you for excess wear and damage, if the lessor actually makes the repairs which are then reflected in a higher sale price for the vehicle which is credited to you.

Upon early termination, the lessor may charge you only the following amounts:

  • any past due lease payments;
  • any other unpaid amounts due (for example, parking tickets, use taxes, etc.);
  • any fees or taxes imposed by a government taxing authority;
  • a reasonable disposition fee as stated in the lease agreement; or the actual costs of selling the vehicle; any additional early termination charge disclosed in the lease which is reasonably related to the lessors anticipated or actual harm; plus
  • any difference between the actuarial lease balance and the realized value of the vehicle.

    The "realized value" of the vehicle is the wholesale sales price, the highest cash bid, or the appraised value determined by an independent third party agreed to by both you and the lessor. Since the realized value affects your early termination liability, you have a right to a binding independent appraisal.
    The "actuarial lease balance" is an early termination payoff amount which is calculated similarly to the actuarial loan balance required for installment sale payoff balances.

Protections at Lease Termination

If you return the vehicle to the lessor at lease termination, excess wear and damage charges can be assessed only under the following circumstances:

  • The lessor actually repairs the vehicle or gets bona fide estimate of the repair costs from a licensed appraiser;
  • The lessor must provide you with an itemized excess wear and damage bill and a notice of your right to a second inspection of the vehicle if you disagree with the bill.
  • You have a right to a second inspection at your expense by a licensed appraiser agreed to by the lessor.

    If you disagree with the lessor's charge for excess wear and damage, you may submit the dispute to binding arbitration established by the Attorney General. For more information call 1-800-771-7755.

Penalty Provisions

You have a private right of enforcement and are entitled to recover the following amounts if the lessor does not comply with each of the MVRLA's requirements:

  • Any actual damages you have suffered;
  • In addition to the actual damages, a civil penalty of $100 for any violation of the Act by the lessor;
  • Your reasonable attorney fees;
  • If you do not sign the LEASE AGREEMENT and the lessor fails to refund any payment you made within 15 days, twice the amount of the payment not refunded on time;
  • If you do not sign the LEASE AGREEMENT and the lessor does not return your trade-in vehicle, the value of the vehicle plus your actual costs and expenses; and
  • The Attorney General's office also has civil enforcement authority.

Your Obligations

Consumer also have obligations to meet all contract terms in their lease. These include, but are not limited to:

  • Prompt payment of all monthly payments due.
  • All manufacturer recommended servicing oil changes
  • Usage of the vehicle in compliance with the terms of the lease and never for illegal purposes
  • Prompt payment of all legitimate lessor charges and pas through expenses, e.g. late payment charges, unpaid parking tickets, annual registration fees, all reasonable excess wear and damage and excess mileage charges.
  • Maintenance of required automobile insurance as specified in your lease agreement.

Leadership in Consumer Protection

The New York Motor Vehicle Retail Leasing Act (NYMVRLA) is the most comprehensive law in the country protecting consumers who lease new or used vehicles. The New York Attorney General's office and The Greater New York Automobile Dealers Association (GNYADA) are proud of their efforts to make leasing easier to understand and more user friendly for the citizens of New York.