New York State Leased Car Laws

The state of New York's leased car laws protect consumers from fraud and obligate full disclosure of lease terms.
The state of New York's leased car laws protect consumers from fraud and obligate full disclosure of lease terms. (Image: Hemera Technologies/ Images)

Leasing a car is a major investment, so it’s important for prospective lessees to be aware of their legal rights and responsibilities under the law. New York was one of the first states to enact a comprehensive leased car law when it passed the Motor Vehicle Retail Leasing Act in 1994. New York Attorney General Eric Schneiderman described the law as “strongest auto-leasing law in the country.”

Leasing Disclosure Rules

New York’s Motor Vehicle Retail Leasing Act requires disclosure of lease terms and establishes a set of protections for consumers. Under the MVRLA, all leases must include the car’s cost, adjusted for down payments, the estimated value after the lease and a full accounting of any charges resulting from early termination. In addition, lessors must provide prospective customers with a sample lease agreement on request. Finally, the lease must provide for the consumer a clear and detailed definition of “excess wear and tear,” for which the lessee may be liable at the end of the lease.

Early Termination Fee Limits

Under New York leased car laws, lessors are limited in the amount they can charge lessees for early termination. At an early termination, lessors may only charge for excess wear and tear minus any gain realized by a lessor for repairs, and is not allowed to charge for excess mileage. They may also charge lessees for past due or unpaid lease payments, government-imposed fees and taxes -- at cost -- and “a reasonable disposition fee as stated in the lease agreement,” according the state’s Attorney General. Additionally, the lessor may charge the difference between the actuarial lease balance -- the amount remaining on the lease at early termination -- and the realized value of the returned vehicle, either from sale or appraisal. Finally, the MVRLA entitles lessees to an estimate of excess wear and tear costs, and the right of second inspection if they dispute the bill.

Remedies and Responsibilities

If a lessee’s rights are violated, the customer has the right to sue their lessor for any damages they have suffered plus $100 in civil penalties for each violation of the law. In addition, the office of the attorney general can pursue complaints and prosecute violations in civil court. New York leased car laws require customers to meet all of their contract obligations described in the lease, including monthly payments and manufacturer-recommended oil changes and other maintenance. Lessees are also required to promptly pay any legitimate late charges and fees arising from the lease.

Registration Requirements and Sales Taxes

New York law requires the registration of all vehicles operated in the state. In most cases, dealers in the state will collect the necessary documentation from the lessee during the lease application process and provide the information to the Department of Motor Vehicles. In the event that they do not, the leasing company must authorize the lessee to register the car, as the company still holds the title to the vehicle. Sales tax in New York is collected upfront -- at the time of registration -- and lessees must provide proof of payment to the DMV.

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