Substitute House Bill No. 6684
Public Act No. 99-278
An Act Concerning Leased Vehicles.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) As used in this act, unless the context otherwise requires:
(1) "Motor vehicle" means a motor vehicle of the type and kind required to be registered and titled under chapter 246 of the general statutes, except a recreational vehicle, moped, motorcycle powered by a motor with a displacement of fifty cubic centimeters or less or mobile home.
(2) "Retail lessee" means a person who executes a retail lease agreement for a motor vehicle from a retail lessor.
(3) "Retail lessor" means a person who regularly engages in the business of selling or leasing motor vehicles and who offers or arranges a lease agreement for a motor vehicle, including any agents or affiliates acting on behalf of the retail lessor.
(4) "Lease agreement" means a written agreement entered into in this state on or after July 1, 2000, for the transfer from a retail lessor to a retail lessee of the right to possession and use of a motor vehicle primarily for personal, family or household use, in exchange for consideration for a scheduled term exceeding four months, whether or not the retail lessee has the option to purchase or otherwise become the owner of the vehicle at the expiration of the agreement. "Lease agreement" does not include an absolute sale, a sale pending approval, or a retail instalment sale.
(5) "Adjusted capitalized cost" means the capitalized cost less any capitalized cost reduction payment made by the retail lessee at the inception of the lease agreement and any net trade-in allowance granted by the retail lessor.
(6) "Irregularity" means the amount or timing interval varies by more than twenty-five per cent from the amount or timing interval most commonly specified under the lease agreement.
(7) "Ending balance" means the purchase option price at the end of the lease term.
(8) "Lease amount financed" means the adjusted capitalized cost minus:
(A) Any lease finance charge included in it; and
(B) Any advance lease payment or nonrefundable security deposit due on or before delivery of the motor vehicle.
(9) (A) "Lease finance charge" means the rent charge plus any other charge payable directly or indirectly by the retail lessee and imposed directly or indirectly by the retail lessor as an incident to, or condition of, the lease agreement.
(B) "Lease finance charge" includes:
(i) An origination or acquisition charge;
(ii) A charge for assigning, servicing or carrying the lease;
(iii) Broker fees;
(iv) A disposition or pick-up charge due on lease termination;
(v) Taxes unique to leases.
(C)"Lease finance charge" does not include:
(i) Charges of a type payable in a cash purchase, such as official fees for sales or use taxes, registration or title, or for an extended warranty or service contract;
(ii) Charges for late payment or other delinquency or default;
(iii) A refundable security deposit;
(iv) Premiums for insurance;
(v) Charges for additional authorized mileage;
(vi) An application fee charged to all applicants whether or not a lease agreement is consummated;
(vii) Fees prescribed by law that actually are or will be paid to public officials for determining the existence of or for perfecting, releasing or satisfying a security interest.
(10) "Lease rate" means the nominal annual percentage rate that reflects the amortization of the lease amount financed to the ending balance over the scheduled term of the lease, calculated according to the actuarial method of allocating base periodic payments made on an obligation between the lease finance charge and the lease amount financed, pursuant to which a payment is applied first to the accrued lease finance charge and the balance is applied to the unpaid lease amount financed.
Sec. 2. (NEW) (a) No retail lessor shall enter into a lease agreement with a retail lessee, unless the lease rate is calculated as follows: The lease rate for a lease with equal base periodic payments and equal periodic intervals is m x i x 100. For purposes of this subsection:
(1) m is the number of payment periods in a year, and the value of i is such that
(2) "C" is the lease amount financed;
(3) "P" is the amount of each base periodic payment;
(4) "R" is the ending balance;
(5) "n" is the number of payment periods in the lease; and
(6) "z" is the number of base periodic payments that are paid at or before the beginning of the lease term.
(b) If there is an irregularity in the amount or timing of base periodic payments required during the lease term, the equation in subsection (a) of this section shall be modified as necessary to calculate the value of "i" in accordance with actuarial principles.
(c) For purposes of this section:
(1) When a lease calls for payments to be made at intervals measured by reference to weeks or months, the lease rate may be calculated on the assumption that each week is one-fifty-second of a year long or that each month is one-twelfth of a year long.
(2) In a lease with no irregularity in the amount or timing of base periodic payments, a disclosed lease rate shall be considered accurate if it is within one-eighth of one per cent of the actual lease rate, as calculated in accordance with this section.
(3) In a lease with an irregularity in the amount or timing of base periodic payments, a disclosed lease rate shall be considered accurate if it is within one-fourth of one per cent of the actual lease rate, as calculated in accordance with this section.
(4) The Commissioner of Motor Vehicles, in regulations adopted pursuant to chapter 54 of the general statutes, may prescribe additional assumptions for calculating the lease rate or its component values.
Sec. 3. (NEW) Every retail lessor shall disclose in the lease agreement provided to the retail lessee, in a clear and conspicuous manner, the lease amount financed, the lease finance charge, the lease rate and the consumer lease disclosure required by the federal Truth-In-Lending Act and the rules promulgated pursuant to said act.
Sec. 4. (NEW) Failure to comply with any provision of this act shall be unlawful and constitute a deceptive and unfair trade practice under subsection (a) of section 42-110b of the general statutes.
Sec. 5. (NEW) This act shall not be construed in a manner that is inconsistent with applicable provisions of federal law, including the federal Truth-In-Lending Act and the regulations promulgated pursuant to said act, or any laws of the state of Connecticut, including provisions of the Uniform Commercial Code.
Approved July 8, 1999TOP