Leases & rentals
Car & Auto
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.
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
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.
Selling consumers additional insurance coverage, often unnecessarily duplicating coverage they already have, is the primary way car rental companies increase the cost of the rental. There are four different types of insurance and insurance-like coverages the companies try to sell to consumers at the rental counters -- Collision Damage Waiver (CDW), Supplemental Liability Protection (SLP), Personal Accident Insurance (PAI), and Personal Effects Coverage (PEC). Car rental companies are prohibited from refusing to rent you a car unless you purchase the additional insurance. The coverages are all optional. Combined, they can add up to $30 per day to the rental bill. Each coverage protects against a different risk, but your car, home, life, or health insurance policies, or your credit card, may provide all or part of the protection you need, particularly when combined with the minimum insurance the car rental company is required by law to provide as a part of every rental.
Collision damage waiver (CDW)
Also known as Loss Damage Waiver (LDW) or Physical Damage Waiver (PDW). For a fee of up to $9 per day for cars costing less than $20,000, up to $12 per day for cars between $20,000 and $35,000, and up to $15 for more expensive cars, the car rental company will waive all or part of its cost if the rental car is damaged or stolen, provided the car is not driven by an unauthorized driver, driven recklessly, or the coverage is voided for several other reasons. While this coverage may make sense for some renters, you should know that if you have a New York automobile insurance policy, you already have this coverage for a rental vehicle unless you declined to accept it when you purchased it. In addition, most premium credit cards, such as gold or platinum cards, provide this coverage, with certain limitations, as a benefit of using the credit card to rent cars. Some cards do not provide this benefit for luxury cars, SUVs, and vans. Before you pay a lot for CDW, it is worth a call to your insurance agent and credit card company to find out if you need to purchase it.
Supplemental liability protection (SLP)
Also known as Liability Insurance Supplement (LIS) or Supplemental Liability Insurance (SLI). For a fee of approximately $10.95 per day, the car rental company will supplement the liability insurance that the company must, by New York law, provide. That required coverage consists of the same minimum levels of liability insurance that all vehicle owners in New York must have: $25,000 of bodily injury liability protection if one person is injured in an accident, $50,000 if there is more than one person injured; $50,000 if there is one death from an accident, $100,000 if there is more than one death; plus $10,000 of property damage liability protection. For many renters who have modest amounts of assets, the minimum coverage the car rental companies must provide as a part of the rental may be enough to protect them from lawsuits by victims of accidents involving the rental car. If you have your own automobile insurance policy with coverage above the minimum amounts, your policy should cover you when you operate a rental vehicle, so SLP is likely not needed. However, SLP usually provides $1 million of liability protection, considerably more coverage than most consumers have under their own automobile insurance policies. So if there is a reason that you want more coverage for the rental than you ordinarily carry for your own car, or you do not have an automobile insurance policy, buying the SLP may make sense.
Personal accident insurance (PAI)
This coverage, usually costing about $3 per day, provides medical, ambulance, and death benefits for the renter and passengers of the rental car in the event of an accident. The medical coverage is usually around $3,500 and the ambulance benefit of $150. Typically the death benefit is $175,000 for the renter and $17,500 for the passenger. Many of these benefits duplicate coverage you may already have under your health, life, or automobile insurance policies, or duplicate coverage that the car rental company must provide under New York’s No Fault law.
Personal effects coverage (PEC)
This coverage, which typically costs $2 per day, usually provides $500 per person of insurance coverage, with a $1,500 maximum, for theft of personal effects of the renter and his or her family. Again, this coverage may duplicate coverage the renter already has through a homeowner’s or tenant’s policy, although the coverage usually pays in addition to that other insurance. That means that your own policy will typically pay first, and when its policy limits have been reached, the PEC will then pay.
E-ZPass, GPS, and other optional products
The car rental company may offer E-ZPass for tolls, GPS, and other optional products. Make sure to determine whether you need such services and confirm the price per day of such services. If you do not plan to obtain E-ZPass, determine whether the rental company may charge additional fees for paying tolls if you drive through E-ZPass-only toll lanes without E-ZPass.
Additional drivers are allowed
Car rental companies must allow your spouse to drive the vehicle if he or she is licensed and at least eighteen years of age. Other licensed drivers can be authorized to drive the rental vehicle if expressly listed on the rental agreement. Car rental companies are permitted to charge $3 per additional driver per day.
Age discrimination prohibited
Car rental companies in New York are required to rent to licensed drivers who are 18 years of age or older. However, they may charge a surcharge for drivers who are under 25. The amount of the surcharge can vary substantially from one car rental company to another, so shop around.
Credit cards are not required
You do not have to have a credit card to rent a car in New York. However, if you do not have a credit card, the car rental company may require you to go through a screening process that can take up to several days. The company may require a cash security deposit as well. If you do not have a credit card, check with the car rental company well ahead of when you want to rent to find out what its procedures are for non-credit card rentals.
Car rental companies are prohibited in New York from refusing to rent a car to any person otherwise qualified because of race, color, ethnic origin, religion, disability, or sex.