is EASINC E-Z LEASINC E-Z LI -Z LEASINC E-Z LEA SIN G - Part IV: E-Z Leasing E-Z Ernest Dickerson Filmmaker By Pau! A. Eisenstein » > «- -s EAS ,J b Z L EAS 8 8 -z L 5 ;C À . •J*« í¿ - •.’ 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.” < j *E* Z LI C ’ E- Z LI £