Additional Disclosures Required under Certain State Laws

At least 20 states have chosen to adopt their own disclosure laws on car leases in order to provide more protection to consumers. These states are: Arkansas, California, Colorado, Florida, Illinois, Hawaii, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, New Hampshire, New Jersey, New York, Oklahoma, Washington, West Virginia, and Wisconsin. Some laws are inconsistent with the CLA or Regulation M. Where these inconsistencies exist, state law is superseded by federal law. Moreover, some state laws give greater protection to the consumer. These laws require additional notices, warnings, disclosures regarding gap insurance and manufacturer warranties. Also, some newly enacted state laws have caused consumers confusion which is contrary to the intention of state reform.

California has enacted extensive reforms of leasing law. For example, the $25,000 maximum limit stipulated by the CLA and Regulation M does not apply to cars leased in California. Second, leasees are free to terminate at any time. Termination penalties are calculated according to a specified formula that sets a ceiling on the amount. Moreover, notice must be given at least ten days in advance by mail that a vehicle turned in by a leasee will be sold by the lessor. This disclosure allows those who terminated early to obtain an independent appraisal of the vehicle’s worth. If the appraisal gives a value higher regarding the residual value, the leasee will owe less in termination fees.


Inside Additional Disclosures Required under Certain State Laws