lease 1 leasing 1. lease 2 consumer leasing act regulation m — consumer leases — more than 4...
TRANSCRIPT
![Page 1: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/1.jpg)
LEASELEASE 1
LEASINGLEASING
1
![Page 2: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/2.jpg)
LEASELEASE 2
Consumer Leasing Act
• Regulation M— consumer leases— more than 4 months—$25,000 contract or less
LEASELEASE
![Page 3: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/3.jpg)
LEASELEASE 3
Keys to Vehicle Leasing
• Leasing is different from buying
• Consider beginning, middle, and end-of-lease costs
• You can compare lease offers and negotiate some terms
• Know your rights and responsibilities
![Page 4: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/4.jpg)
LEASELEASE 4
Leasing is Different from Buying
• Ownership
• Up-front costs
• Monthly payments
• Early termination
• Vehicle return
• Future value
• Mileage
• Excess wear
• End of term
![Page 5: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/5.jpg)
LEASELEASE 5
Ask yourself• Typically, how often do I get
a new vehicle?
Lease or Buy Considerations
• How many miles per year do I drive?
• Do I maintain my car in good condition?
![Page 6: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/6.jpg)
LEASELEASE 6
Consider Beginning, Middle, and End-of-Lease Costs
• Acquisition fee• First monthly payment• Capitalized cost reduction• Refundable security deposit• Title, registration, & license fees• Freight charges• State and local taxes
![Page 7: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/7.jpg)
LEASELEASE 7
Consider Beginning, Middle, and End-of-Lease Costs• Monthly payment• Maintenance costs• Insurance premiums• If applicable:
—Early termination charges—Sales and use tax—Inspections—Personal property tax—Late-payment fees
![Page 8: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/8.jpg)
LEASELEASE 8
Consider Beginning, Middle, and End-of-Lease Costs
Return• Disposition fee• Excessive wear charges• Excess mileage charges
Buy• Purchase-option price• Purchase-option fee (if any)
![Page 9: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/9.jpg)
LEASELEASE 9
Compare Offers and Negotiate Terms
• Monthly lease payments
• End-of-lease payments
• Purchase option
• Gap coverage
![Page 10: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/10.jpg)
LEASELEASE 10
Compare Offers and Negotiate Terms
• Agreed-upon value of vehicle (price)
• Up-front payments, including capitalized cost reduction (down payment)
• Length of lease
• Mileage allowance & per-mile charges
![Page 11: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/11.jpg)
LEASELEASE 11
Gap
The Gap
Number of months
$
The difference between the insured value of the vehicle and the amount due for early termination
Early Termination Payoff
InsuredValue
![Page 12: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/12.jpg)
LEASELEASE 12
Know Your Rights and Responsibilities
• Use for agreed-upon number of months and miles
• Service under warranty or recalls
• Turn it in, pay any end-of-lease charges, and “walk away”
• Buy the car if you have a purchase option
![Page 13: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/13.jpg)
LEASELEASE 13
Know Your Rights and Responsibilities
Returning the vehicle
• Early— early termination charges
• At end of lease— excess mileage charges, if any— excessive wear charges, if any
![Page 14: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/14.jpg)
LEASELEASE 14
Gross cap cost- Reductions = Adjusted cap cost- Residual value= Depreciation+ Rent
A Lease’s Monthly Payment
= Total for calculating base monthly payments
÷ Lease term in months= Base monthly payment
![Page 15: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/15.jpg)
LEASELEASE 15
Agreed-upon value (Price plus freight and options)
+ Insurance that is capitalized + Prior loan or lease balances+ Acquisition or documentation fee+ ???
Gross Capitalized Cost
![Page 16: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/16.jpg)
LEASELEASE 16
Capitalized Cost Reduction
Cash
+ Trade-in allowance
+ Rebates/dealer incentives
Think of capitalized cost reduction as pre-paid depreciation.
![Page 17: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/17.jpg)
LEASELEASE 17
Residual ValueAssumes that Residual Value = Purchase Option Price
Higher ResidualMonthly payment is lower Purchase-option price is higher
Lower ResidualMonthly payment is higher
Purchase-option price is lower
Negotiating a higher mileage allowance will lower residual value.
![Page 18: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/18.jpg)
LEASELEASE 18
Depreciation—You Pay For What You Use
LeasePay the stated depreciation during the lease term
$22,300 gross cap cost- 12,350 residual value
= 9,950 depreciation 48 months= $207 avg. depreciation
per month
FinancePay the full cost during the loan term
$22,300 cost of vehicle
48 months= $465 avg. cost
per month
![Page 19: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/19.jpg)
LEASELEASE 19
• Cost of money over time (Similar to interest on a loan)
• Not an APR
Rent Charge
![Page 20: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/20.jpg)
20
![Page 21: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/21.jpg)
Top of Lease Form Disclosures
21
![Page 22: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/22.jpg)
Top of Lease Form Disclosures
Beginning
22
![Page 23: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/23.jpg)
Top of Lease Form Disclosures
Beginning Middle
23
![Page 24: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/24.jpg)
Top of Lease Form Disclosures
Beginning Middle End
24
![Page 25: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/25.jpg)
Top of Lease Form Disclosures
Beginning Middle End Overall
25
![Page 26: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/26.jpg)
Amounts Due at Lease Signing Are Itemized
Column totals should be equal26
![Page 27: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/27.jpg)
Monthly Payment Calculation
27
![Page 28: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/28.jpg)
Additional Disclosures
• Early termination• Excess wear and mileage• Purchase option• Other terms in the lease
28
![Page 29: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/29.jpg)
29
![Page 30: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/30.jpg)
LEASELEASE 30
Early Termination Notice
You may have to pay a substantial charge if you end this lease early. The charge may be up to several thousand dollars. The actual charge will depend on when the lease is terminated. The earlier you end the lease, the greater this charge is likely to be.
![Page 31: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/31.jpg)
LEASELEASE 31
Advertising
SPARK EX Lease for $245/month for 48 mo.
$4,095 due at lease signing, includes security depositexcludes taxes, title, and registration fees
15,000 miles per year. Subject to credit approval
![Page 32: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/32.jpg)
LEASELEASE 32
Beyond the Ad
• You’re responsible for ongoing license plate, inspection, and emission test fees
• Required insurance coverage may be at higher limits than you now carry
• You must follow the maintenance schedule
• You’re responsible for “excessive wear”
![Page 33: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/33.jpg)
LEASELEASE 33
Lease Rate — AdvertisingMay not be • advertised as an “annual percentage rate”
or “annual lease rate” or any equivalent term• more prominent than required written
disclosures
Don’t use the Lease Rate as you would use an APR to shop for the best rate on a loan.
Must state “This percentage rate may not measure
the overall cost of financing this lease”
![Page 34: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/34.jpg)
LEASELEASE 34
Special Issues
• Personal property taxes
• Relocation/Transfers— Within U.S.— Outside U.S.
• Flexibility in payments
![Page 35: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/35.jpg)
LEASELEASE 35
If You Have a Problem, Talk to . . .
1. The dealer, manufacturer, or lessor
2. Local consumer protection office or state attorney general’s office
3. Federal orTrade Commission
Federal regulators(if the lessor is a bank)
• Federal Reserve Board• Federal Deposit Insurance Corporation• Office of the Comptroller of the Currency • Office of Thrift Supervision
![Page 36: LEASE 1 LEASING 1. LEASE 2 Consumer Leasing Act Regulation M — consumer leases — more than 4 months — $25,000 contract or less LEASE](https://reader036.vdocuments.net/reader036/viewer/2022081519/56649c945503460f949503d9/html5/thumbnails/36.jpg)
Questions?
LEASINGLEASING
36