To All Depository Institutions and Others Concerned in the Second Federal Reserve District:
The following is from a statement by the Board of Governors of the Federal Reserve System:
An educational initiative designed to inform the public of their rights under new disclosure requirements for vehicle leasing has been announced by the Federal Reserve Board. The vehicle leasing disclosures are part of the Board's Regulation M, which governs disclosures for leases to individuals of $25,000 or less.
Central to the government-industry campaign is a brochure to explain new disclosures that are required in all vehicle leasing transactions as of January 1.
The announcement of the new program was made at a special press briefing held by the Board. Represented at the briefing were the Federal Trade Commission, the Office of the Florida Attorney General, the National Automobile Dealers Association, and the Association of Consumer Vehicle Lessors.
The brochure, Keys to Vehicle Leasing, provides consumers with an overview of the most common type of vehicle lease used by the automotive industry, a closed-end lease. Under this type of lease agreement, consumers may return the automobile, pay any end-of-lease costs, and walk away. The brochure compares common facets of both buying and leasing a vehicle so that an individual can make a more informed decision.
Within the text of the brochure, a copy of a closed-end lease is included so that consumers can become more familiar with the document. In addition, the brochure stipulates the leasing terms that a dealer must disclose to the consumer. For example, lessors are required to tell individuals about:
- fees, taxes, and insurance requirements
- standards for wear and use, maintenance responsibilities, and warranties
- early termination charges, security interests, and late payment charges
- the consumers's option to purchase the car.
Other government agencies and organizations taking part in the educational effort are:
American Automobile Manufacturers Association
American Financial Services Association and the AFSA Education Foundation
Arizona Attorney General
Association of International Automobile Manufacturers
Consumer Bankers Association
Cooperative Extension System
National Vehicle Leasing Association
Copies also may be obtained by contacting the Federal Reserve Board's Publications Services, Mail Stop 127, Washington, D.C. 20551 (202-452-3244), or this Bank's Public Information Department (212-720-6130).