Buying or leasing a car is one of the most important and expensive decisions that you may face as a consumer.
New York was the first state in the nation to require leases to disclose comprehensive information. The Office of the New York State Attorney General and the Greater New York Automobile Dealers Association (GNYADA) supported passage of the law to help you and other consumers better understand lease terms. We explain some of your key legal rights below.
The primary purpose of the Motor Vehicle Retail Leasing Act (MVRLA) is to ensure that you:
The New York law makes shopping for a new lease much easier because of the important information that every lease must disclose to you. Here are some key items to watch for when considering a lease:
Capitalized cost: This should be comparable to the leased vehicle's purchase price. Capitalized cost is the amount that you (the lessee) and the dealer or leasing company (the lessor) agree upon at the beginning of the lease for all items and services included in the lease. It is comparable to the vehicle's selling price plus all related goods and services, such as insurance, warranties, registration fees, and taxes. You can negotiate the capitalized cost.
Adjusted capitalized cost: This is the capitalized cost minus any down payment, manufacturer's rebate, or trade-in allowance. The adjusted capitalized cost is used to determine your monthly lease payment and your obligation at early termination. The adjusted capitalized cost is much like the amount financed in an installment sale.
Estimated residual value: This is the value of the vehicle at the end of the lease. This amount is projected by the dealer or lessor. Your purchase option may differ.
The adjusted capitalized cost and the residual value determine the depreciation portion of your monthly payments. Be sure to compare the annual mileage on which the residual value is based.
Open-ended leases: Beware of leases that make you pay the difference between the estimated vehicle value when you signed the lease and the "realized" or real value when the car is returned. You could be charged a lot of money!
Additional early-termination charge: A lease must disclose this charge so you know how much you have to pay for ending a lease early. The maximum amount the lessor can charge you for terminating early includes the actuarial lease balance (how much you should pay for the rest of the lease, calculated using a traditional actuarial method) plus this "additional" charge. If a lease does not disclose an additional early-termination charge, the lessor cannot charge more than the actuarial lease balance (other than any amounts you owe).
Be sure to ask for these charges when shopping for a lease. Consider these disclosed amounts when you are comparing other factors: monthly payment, total lease charges, mileage allowance, excess mileage charges, purchase option, and other key features.
The New York MVRLA provides important consumer protections before and during a lease, as well as at lease termination.
If you terminate the lease early, the law limits the amount the lessor can charge you. Early-termination charges must be reasonable. The earlier you terminate your lease, however, the higher these charges will be:
If you return the vehicle to the lessor at lease termination, you can be charged for excess wear and damage only under the following circumstances:
You have a private right of enforcement. The Office of the New York State Attorney General also has civil enforcement authority. If the lessor does not comply with all of the MVRLA's requirements, you are entitled to recover the following amounts:
You also have obligations to meet all contract terms in any lease you sign. These include, but are not limited to:
The New York Motor Vehicle Retail Leasing Act (MVRLA) is one of the most comprehensive laws in the country protecting consumers who lease new or used vehicles. The Office of the New York State Attorney General and the Greater New York Automobile Dealers Association (GNYADA) are proud of their efforts to make leasing easier to understand and more user friendly for the citizens of New York.
Selling consumers additional insurance coverage, often unnecessarily duplicating coverage they already have, is the primary way car rental companies increase the cost of the rental. There are four different types of insurance and insurance-like coverages the companies try to sell to consumers at the rental counters -- Collision Damage Waiver (CDW), Supplemental Liability Protection (SLP), Personal Accident Insurance (PAI), and Personal Effects Coverage (PEC). Car rental companies are prohibited from refusing to rent you a car unless you purchase the additional insurance. The coverages are all optional. Combined, they can add up to $30 per day to the rental bill. Each coverage protects against a different risk, but your car, home, life, or health insurance policies, or your credit card, may provide all or part of the protection you need, particularly when combined with the minimum insurance the car rental company is required by law to provide as a part of every rental.
Also known as Loss Damage Waiver (LDW) or Physical Damage Waiver (PDW). For a fee of up to $9 per day for cars costing less than $20,000, up to $12 per day for cars between $20,000 and $35,000, and up to $15 for more expensive cars, the car rental company will waive all or part of its cost if the rental car is damaged or stolen, provided the car is not driven by an unauthorized driver, driven recklessly, or the coverage is voided for several other reasons. While this coverage may make sense for some renters, you should know that if you have a New York automobile insurance policy, you already have this coverage for a rental vehicle unless you declined to accept it when you purchased it. In addition, most premium credit cards, such as gold or platinum cards, provide this coverage, with certain limitations, as a benefit of using the credit card to rent cars. Some cards do not provide this benefit for luxury cars, SUVs, and vans. Before you pay a lot for CDW, it is worth a call to your insurance agent and credit card company to find out if you need to purchase it.
Also known as Liability Insurance Supplement (LIS) or Supplemental Liability Insurance (SLI). For a fee of approximately $10.95 per day, the car rental company will supplement the liability insurance that the company must, by New York law, provide. That required coverage consists of the same minimum levels of liability insurance that all vehicle owners in New York must have: $25,000 of bodily injury liability protection if one person is injured in an accident, $50,000 if there is more than one person injured; $50,000 if there is one death from an accident, $100,000 if there is more than one death; plus $10,000 of property damage liability protection. For many renters who have modest amounts of assets, the minimum coverage the car rental companies must provide as a part of the rental may be enough to protect them from lawsuits by victims of accidents involving the rental car. If you have your own automobile insurance policy with coverage above the minimum amounts, your policy should cover you when you operate a rental vehicle, so SLP is likely not needed. However, SLP usually provides $1 million of liability protection, considerably more coverage than most consumers have under their own automobile insurance policies. So if there is a reason that you want more coverage for the rental than you ordinarily carry for your own car, or you do not have an automobile insurance policy, buying the SLP may make sense.
This coverage, usually costing about $3 per day, provides medical, ambulance, and death benefits for the renter and passengers of the rental car in the event of an accident. The medical coverage is usually around $3,500 and the ambulance benefit of $150. Typically the death benefit is $175,000 for the renter and $17,500 for the passenger. Many of these benefits duplicate coverage you may already have under your health, life, or automobile insurance policies, or duplicate coverage that the car rental company must provide under New York’s No Fault law.
This coverage, which typically costs $2 per day, usually provides $500 per person of insurance coverage, with a $1,500 maximum, for theft of personal effects of the renter and his or her family. Again, this coverage may duplicate coverage the renter already has through a homeowner’s or tenant’s policy, although the coverage usually pays in addition to that other insurance. That means that your own policy will typically pay first, and when its policy limits have been reached, the PEC will then pay.
The car rental company may offer E-ZPass for tolls, GPS, and other optional products. Make sure to determine whether you need such services and confirm the price per day of such services. If you do not plan to obtain E-ZPass, determine whether the rental company may charge additional fees for paying tolls if you drive through E-ZPass-only toll lanes without E-ZPass.
Car rental companies must allow your spouse to drive the vehicle if he or she is licensed and at least eighteen years of age. Other licensed drivers can be authorized to drive the rental vehicle if expressly listed on the rental agreement. Car rental companies are permitted to charge $3 per additional driver per day.
Car rental companies in New York are required to rent to licensed drivers who are 18 years of age or older. However, they may charge a surcharge for drivers who are under 25. The amount of the surcharge can vary substantially from one car rental company to another, so shop around.
You do not have to have a credit card to rent a car in New York. However, if you do not have a credit card, the car rental company may require you to go through a screening process that can take up to several days. The company may require a cash security deposit as well. If you do not have a credit card, check with the car rental company well ahead of when you want to rent to find out what its procedures are for non-credit card rentals.
Car rental companies are prohibited in New York from refusing to rent a car to any person otherwise qualified because of race, color, ethnic origin, religion, disability, or sex.