AB870: Bill Text

AB870, s. 1 Section 1. 421.202 (6) of the statutes is amended to read:

AB870,2,4 421.202 (6) Consumer Except as provided in s. 422.312, consumer credit trans actions in which the amount financed exceeds $25,000 or other consumer transac tions in which the cash price exceeds $25,000;

AB870, s. 2 Section 2. 422.312 of the statutes is created to read:

AB870,2,6 422.312 Motor vehicle lease disclosures. (1) In this section:

AB870,2,10 (a) "Capitalized cost" means the agreed-upon total amount which, after de ducting any capitalized cost reduction, serves as the basis for calculating the amount of the periodic payment under an agreement for the lease of a motor vehicle. Capital ized cost includes all of the following:

AB870,2,11 1. Taxes.

AB870,2,13 2. Registration, license, acquisition, administration, assignment or other simi lar fees.

AB870,2,16 3. Charges for insurance, for guaranteed auto protection coverage or a waiver of this coverage, for an extended warranty, mechanical repair contract, service con tract or vehicle maintenance agreement or for other similar charges.

AB870,2,17 4. Fees and charges for accessories and for installing accessories.

AB870,2,18 5. Charges for delivering, servicing, repairing or improving the vehicle.

AB870,2,20 6. Charges for other goods, services and benefits incidental to the lease transac tion.

AB870,3,7 (b) "Capitalized cost reduction" means any payment made by cash, check re bates or similar means that is in the nature of a down payment made by the lessee and any net trade-in allowance granted by the lessor at the inception of the lease for the purpose of reducing the capitalized cost. "Capitalized cost reduction" does not include any base lease payments due at the inception of the lease. If all lease pay ments are to be paid at the inception of the lease, "capitalized cost reduction" does not include any lease payment.

AB870,3,10 (c) "Effective interest rate" means, for any lease agreement with an option to purchase the vehicle at the end of the lease agreement, the rate of interest that is determined by doing the following:

AB870,3,12 1. Calculating the capitalized cost, less any capitalized cost reduction, for the vehicle to be leased under the lease agreement.

AB870,3,17 2. Calculating the annual interest rate that would have to be paid on the amount determined under subd. 1. so that the amount, if invested at that rate of in terest on the date the lease agreement is entered into, would generate sufficient in terest over the term of the lease agreement to allow the payment, from the amount and the interest on it, of all of the following:

AB870,3,20 a. Each periodic payment that the customer is required to make under the lease agreement, at the time the payment is required to be made under the lease agree ment.

AB870,3,22 b. The payment required to exercise the option to purchase the vehicle at the end of the lease agreement, at the end of the lease agreement.

AB870,3,23 (d) "Motor vehicle" means all of the following:

AB870,3,24 1. An automobile, as defined in s. 340.01 (4).

AB870,3,25 2. A station wagon, as defined in s. 340.01 (61).

AB870,4,2 3. A truck, as defined under s. 340.01 (34), that has a gross weight of not more than 8,000 pounds.

AB870,4,6 (2) In addition to any other requirements under this subchapter, a creditor shall disclose all of the following in writing to a customer on a separate form that is signed by the customer before the customer enters into an agreement for the lease of a motor vehicle:

AB870,4,8 (a) The fact that the agreement is a lease agreement and not a purchase agree ment.

AB870,4,9 (b) The value of any motor vehicle used as a trade-in under the lease.

AB870,4,11 (c) The capitalized cost under the lease, and a statement showing how the ca pitalized cost was determined.

AB870,4,12 (d) An itemization of all fees charged under the lease agreement.

AB870,4,13 (e) Any capitalized cost reduction under the lease agreement.

AB870,4,15 (f) If the lease agreement contains an option to purchase the vehicle at the end of the lease agreement, the effective interest rate under the lease agreement.

AB870,4,17 (3) Notwithstanding the dollar limits in s. 421.202 (6), this section applies to any lease of a motor vehicle.

AB870,4,19 (4) The administrator shall promulgate rules specifying the required disclo sures under sub. (2).

AB870, s. 3 Section 3. Effective date.

AB870,4,22 (1)  This act takes effect on the first day of the 7th month beginning after publi cation.

AB870,4,23 (End)