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Part IV: E-Z Leasing
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Ernest Dickerson
Filmmaker
By Pau! A. Eisenstein
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She liked the looks of the Taurus wagon,
and loved the low monthly payments, but
there was one big problem. “1 don't have a
clue what I signed, sighs Detroit printer
Karen Vaughn. “It just seems like they could
have made it a lot simpler.’’
According to the National Vehicle Leas
ing Association, a third of American motor
ists will lease rather than buy their new cars
and light trucks this year. Proponents pro
claim leasing a wav to get the maximum car
for the minimum investment, great news
with new car costs higher than ever.
Yet Vaughn isn’t the only consum er
turned off by the complex and often con
fusing language that makes up the typical
leasing agreement. 1 he simple truth is that
leases arent simple. They contain a variety
of words and phrases, such as “Early Termi
nation Clause, that can confuse vou if you
don't pay close attention.
But things are starting to change. In June
1995, a tough new disclosure law went into
effect in New Jersey. It requires lenders to
disclose a variety of information that will
make it easier for consumers to understand
what they’re signing— and come up with
numbers they can use to shop .’fid compare.
Here's what other states now do:
• Clearly reveal the capitalized cost— the
portion of the car’s price being depreciated
as part of the lease— as well as additional
markups, taxes, fees and insurance;
• Disclose charges a customer might face
at the end o f the lease for such things as
excessive wear-and-tear or additional mile
age;
• State the formula used to calculate the
Early Termination Clause, the often-hefty
penalty for turning a car in ahead o f sched
ule;
• Spell out the means of payment, includ
ing any trade-in, a cash down pavment,
m anufacturer rebates, and finally, the
monthly fee.
W hat you 11 have is “a negotiable num
ber, you can use as a bargaining chip with
the dealer or take somewhere else to shop
and compare, says Robert E. McKew, gen
eral counsel for the American Financial Ser
vices Association, which represents nonbank
lenders like Household Finance and Ford Credit.
McKew calls the new rules “an airtight formula”
that should reduce the opportunity for unscru
pulous dealers or lenders to commit fraud.
But a number of lenders have been moving
aggressively on their own to come up with bor
rower-friendly leasing agreements. Kept short
and simple. Ford’s new form uses colorful icons
to mark key sections. There’s an alarm clock,
for example, pointing out late-payment charges,
and an odometer marking the section on excess
mileage charges. A critical goal was to eliminate
ambiguity. Ford also put together a well-illus
trated brochure spelling out the standards its
dealers will use when determining whether—and
how much—to charge for excess wear-and-tear
when returning your vehicle at the end o f the
lease.
“We felt we should write a lease that you
didn’t need a lawyer to understand,” explains
Michael Wagner, Ford’s Consumer Lease man
ager. "We found that if we made it look friend
lier, people took the time to read the document-
-and that leads to better understanding and cus
tomer satisfaction.”
It may seem surprising to find lenders lead
ing the push for simpler leasing language. But
Rod Couts, director o f the National Vehicle
Leasing Association, says it’s to the industry’s ad
vantage. "It will help prevent frivolous lawsuits,"
he contends. Besides, “if consumers understand
the contract better, they’ll be happier and more
likels ■ to lease the next time.”
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'GM helped me direct
my business
down a new road.”
I here's a big difference betw een shooting
a m ovie in three m o n th s a n d sh o o tin g a
All-second I V com m ercial in a das or tsvo.
Som e com panies don t th in k a film m aker
has th e discipline for such tight deadlines.
So, sehen G eneral M otors becam e on e of
m s first com m ercial clients, I kness flies
were judging m e In ins talent an d abilits
That was im p o rta n t to me. And, ot
course, b a sin g GM com m ercials on ms
reel helped bring o th e r clients ms ssas
I he road to success can hast- its ups and
dossils, hut it's great to have a com pans
like <iM help m o se m e a lo n g .’’
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General Motors
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