Leases & rentals

Motor vehicle leasing rights

Buying or leasing a car is one of the most important and expensive decisions that you may face as a consumer. 

New York was the first state in the nation to require leases to disclose comprehensive information. The Office of the New York State Attorney General and the Greater New York Automobile Dealers Association (GNYADA) supported passage of the law to help you and other consumers better understand lease terms. We explain some of your key legal rights below.

Leasing a vehicle

The primary purpose of the Motor Vehicle Retail Leasing Act (MVRLA) is to ensure that you:

• can compare lease offers of competing lessors
• 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 that every lease must disclose to you. Here are some key items to watch for when considering a lease:

Capitalized cost: This should be comparable to the leased vehicle's purchase price. Capitalized cost is the amount that you (the lessee) and the dealer or leasing company (the lessor) agree upon at the beginning of the lease for all items and services included in the lease. It is comparable to the vehicle's selling price plus all related goods and services, such as insurance, warranties, registration fees, and taxes. You can negotiate the capitalized cost.

Adjusted capitalized cost: This is the capitalized cost minus any down payment, manufacturer's rebate, or trade-in allowance. The adjusted capitalized cost is used to determine your monthly lease payment and your obligation at early termination. The adjusted capitalized cost is much like the amount financed in an installment sale.

Estimated residual value: This is the value of the vehicle at the end of the lease. This amount is projected by the dealer or 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.

Open-ended leases: Beware of leases that make you pay the difference between the estimated vehicle value when you signed the lease and the "realized" or real value when the car is returned. You could be charged a lot of money!

Additional early-termination charge: A lease must disclose this charge so you know how much you have to pay for ending a lease early. The maximum amount the lessor can charge you for terminating early includes the actuarial lease balance (how much you should pay for the rest of the lease, calculated using a traditional actuarial method) plus this "additional" charge. If a lease does not disclose an additional early-termination charge, the lessor cannot charge more than the actuarial lease balance (other than any amounts you owe).

Be sure to ask for these charges when shopping for a lease. Consider these disclosed amounts when you are comparing other factors: monthly payment, total lease charges, mileage allowance, excess mileage charges, purchase option, and other key features.

Key consumer protections

The New York MVRLA provides important consumer protections before and during a lease, as well as 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 before signing a lease, you are entitled to a refund if your application is not approved. Other protections apply if the lessor holds your vehicle as a trade-in while waiting for execution of the lease.
• The lessor must provide a separate notice if you are responsible for paying any early-termination amount (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. For this gap protection, the lessor can charge its actual cost plus a maximum administrative fee of $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 must give you a completely filled-in and executed copy of the lease when you sign it. Until you receive your copy, you have an unconditional right to cancel the lease.
• You have a 10-day grace period on all monthly payments before the lessor can assess a late charge.
• If you default on a monthly lease payment and your lease is canceled because your payment was late, you have the right to reinstate the lease once during the lease term. The lessor must notify you of the amount necessary to reinstate the lease and give you at least 25 days to reinstate it.
• At your request, the lessor must provide the following without charge: an accounting of the payments you have made, your remaining payments, and an early-termination payoff amount.
• You have the right to terminate the lease at any time after 50 percent of the scheduled lease term if you have paid all due payments.
• The lease must contain a definition of "excess wear and damage" 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 the lessor can charge you. Early-termination charges must be reasonable. The earlier you terminate your lease, however, the higher these charges will be:

• If you return the vehicle before full lease term, the lessor may not charge you for any excess mileage.
• The lessor may charge you only for excess wear and damage. If the lessor actually makes the repairs and raises the sale price for the vehicle, those charges are credited to you.

Upon early termination, the lessor may charge you only for:

• any past-due lease payments
• any other unpaid amounts due (for example, parking tickets or use taxes)
• 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 reasonably related to the lessor's anticipated or actual harm. This must be disclosed in the lease
• any difference between the actuarial lease balance and the realized value of the vehicle. The "actuarial lease balance" is the amount you pay to end the lease early. It is calculated using a traditional actuarial method, similar to how early-payoff balances are calculated for merchandise bought by installments. The "realized value" 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 an appraisal by an independent party. That appraisal is "binding" — it must be accepted by both you and the lessor. 

Protections at lease termination

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

• The lessor actually repairs the vehicle or gets a bona fide estimate of the repair costs from a licensed appraiser.
• The lessor must provide you with an itemized bill for excess wear and damage and a notice of your right to a second vehicle inspection 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. The Office of the New York State Attorney General also has civil enforcement authority. If the lessor does not comply with all of the MVRLA's requirements, you are entitled to recover the following amounts:

• any actual damages you have suffered
• in addition to the actual damages, a civil penalty of $100 for any violation of the MVRLA 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

Your obligations

You also have obligations to meet all contract terms in any lease you sign. These include, but are not limited to:

• prompt payment of all monthly payments due
• all manufacturer-recommended oil changes and service
• 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 pass-through expenses (such as late payment charges, unpaid parking tickets, annual registration fees), all reasonable charges for 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 (MVRLA) is one of the most comprehensive laws in the country protecting consumers who lease new or used vehicles. The Office of the New York State Attorney General 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.