28 Questions
What is the Consumer Leasing Act (CLA) designed to ensure?
Meaningful and accurate disclosure of lease terms to consumers
Which Act contains provisions that govern consumer leases?
Truth in Lending Act
What is the purpose of the Electronic Signatures in Global and National Commerce Act (E-Sign Act)?
To facilitate electronic transactions
What does the Consumer Leasing Act (CLA) limit?
Balloon payments sometimes due at the end of a lease
What is a lessee in a leasing contract?
The property user
What is Regulation Z associated with?
Truth in Lending Act
What is the time limit for bringing actions alleging failure to disclose required information or comply with the Consumer Leasing Act?
One year after the termination of the lease agreement
How long are lessors required to maintain evidence of compliance with Regulation M?
Not less than two years after the date of the disclosures are required to be made or an action is required to be taken
What is one of the examination objectives related to Consumer Leasing Act compliance?
Assessing the quality of the institution’s compliance management system for the CLA
When must meaningful and accurate disclosures of lease terms be given to lessees?
When lessees of personal property that meet the threshold amount are involved
What is the time limit for maintaining evidence of compliance with Regulation M, excluding advertising requirements under Section 7?
Not less than two years after the date of the disclosures are required to be made or an action is required to be taken
What must institutions clearly indicate and correctly enforce for lessees?
Limits of liability
What is one objective related to Consumer Leasing Act compliance examinations?
To determine if lessees are provided with meaningful and accurate disclosures of lease terms
When must evidence of compliance with Regulation M, excluding advertising requirements under Section 7, be maintained by lessors?
For a period not less than two years after the date of disclosures or an action is required to be taken
What do Consumer Leasing Act compliance examinations aim to determine about limits of liability?
If they are clearly indicated and correctly enforced by institutions
What is the total contractual cost limit for a consumer lease effective January 1, 2022?
$61,000
What is the key difference between closed-end and open-end consumer leases?
Disclosure requirements
What does the realized value refer to in a consumer lease?
Price received by the lessor at disposition of leased property
What is the gross capitalized cost in a consumer lease?
Agreed value of the leased property plus any capitalized or amortized items
What does an open-end lease base the amount owed at the end of the term on?
Difference between residual value and realized value of leased property
What amendment requires annual adjustments of threshold by Consumer Price Index increase?
The Dodd-Frank Act
What entities are involved in carrying out consumer leasing according to trends mentioned in the text?
Banks, vehicle finance companies, other finance companies, or retailers directly
What is the 'Capitalized Cost Reduction' in a lease?
The total amount that reduces the gross capitalized cost in a lease
Under what conditions can general disclosures required by Part 1013 be provided to the lessee?
In electronic form, subject to consumer consent and other applicable provisions
When must dated disclosures be given to the consumer?
Before signing the lease, containing all required information
In case of multiple lessors, who can make the required disclosures?
One lessor, and disclosures should be given to any lessee primarily liable
What are advertisements for consumer leases required to comply with?
Specific disclosure requirements and accurate representation of lease terms
What restrictions apply to the use of percentage rates in lease advertisements?
Certain restrictions apply, and some third-party fees may be excluded from periodic payment disclosures in ads
Study Notes
Consumer Leasing Regulations Summary
- Consumers can request a paper copy of an electronic record after giving consent to receive information electronically, and any associated fees.
- "Capitalized Cost Reduction" refers to the total amount that reduces the gross capitalized cost in a lease.
- General disclosure requirements mandate lessors to provide accurate, clear, and conspicuous leasing cost information and disclosures.
- General disclosures required by Part 1013 can be provided to the lessee in electronic form, subject to consumer consent and other applicable provisions.
- If an institution changes hardware or software requirements, it must notify the consumer and allow them to withdraw consent without charge.
- Dated disclosures must be given to the consumer before signing the lease, containing all required information.
- New disclosures must be provided when a consumer renegotiates or extends a lease, with certain exceptions.
- In the case of multiple lessors, one lessor can make the required disclosures, and disclosures should be given to any lessee primarily liable.
- Advertisements for consumer leases must comply with specific disclosure requirements and accurately represent the lease terms.
- If an advertisement includes "trigger terms," it must also state specific information about the lease terms, payments, and extra charges.
- Certain restrictions apply to the use of percentage rates in lease advertisements, and some third-party fees may be excluded from periodic payment disclosures in ads.
- The regulation includes provisions to limit balloon payments, protect consumers at lease termination, and set standards for wear and use charges and penalties.
Test your knowledge on the methods for consumers to obtain a paper copy of an electronic record after giving consent to receive information electronically, including any applicable fees and consent confirmation requirements.
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