LRB-3550/1
KSH:kmg:km
1997 - 1998 LEGISLATURE
June 24, 1997 - Introduced by Representatives Freese, Ward, Kunicki, Hoven,
Otte, Johnsrud, Albers, Ott, M. Lehman and Goetsch, cosponsored by
Senators Breske, Rude, George, Huelsman, Shibilski and Cowles. Referred
to Committee on Financial Institutions.
AB433,1,8
1An Act to repeal 429.203 (2m) (form) (d) and 429.203 (3) (f);
to renumber
2429.203 (2m) (form) (e);
to renumber and amend 218.01 (1) (ar), 429.104 (5)
3and 429.104 (16); and
to amend 218.01 (3) (a) 18., 218.01 (6x) (e), 429.104 (1),
4429.104 (3), 429.104 (3m) (intro.), 429.104 (3m) (a), 429.104 (3m) (b), 429.104
5(4) (intro.), 429.104 (4) (a), 429.104 (4) (b), 429.104 (6), 429.104 (24), 429.203 (3)
6(a), 429.203 (3) (b), 429.203 (3) (c), 429.203 (3) (d), 429.203 (3) (e) 1., 429.203 (3)
7(e) 2., 429.203 (6) (c), 429.207 (2) (f) 1. and 429.207 (2) (f) 2. of the statutes;
8relating to: disclosures for motor vehicle consumer leases.
Analysis by the Legislative Reference Bureau
Current law requires that certain disclosures be included in certain consumer
lease agreements for the lease of a motor vehicle. These requirements apply to leases
of motor vehicles which: 1) are to be used primarily for a personal, family, household
or agricultural purpose; 2) are for a term exceeding 4 months; and 3) have a total
lease obligation, excluding any option to purchase, that does not exceed $25,000.
Under the federal Consumer Leasing Act, the federal reserve board has promulgated
"Regulation M" (
12 CFR Part 213), which also imposes disclosure requirements on
certain motor vehicle lease agreements. The bill makes certain changes to conform
the state law with changes in the federal regulations which will take effect on
October 1, 1997. For example, the bill replaces the term "lease charge" with the term
"rent charge" and replaces the term "base lease payment" with the term "base
periodic payment".
In addition, the bill repeals certain state law disclosure requirements that,
while not directly in conflict with the federal disclosure requirements, overlap with
them. For example, current state law requires a notice above the lessee's signature
which must read "Early termination of this lease may require you to pay a
substantial amount." The federal regulations require the following disclosure:
"Early Termination: You may have to pay a substantial charge if you end this lease
early. The charge may be up to several thousand dollars. The actual charge will
depend on when the lease is terminated. The earlier you end the lease, the greater
this charge is likely to be." The bill repeals the state early termination disclosure.
Similarly, the bill repeals state law requirements regarding the disclosure of the
total payments due on the lease; these requirements differ somewhat from the "total
of payments" disclosure required under the federal regulations. The bill also
modifies certain disclosure requirements regarding the following: 1) the capitalized
cost of the leased vehicle; 2) reductions in the capitalized cost of the leased vehicle;
3) adjusted capitalized cost of the leased vehicle; and 4) the residual value of the
leased vehicle. The bill repeals disclosure requirements regarding the disclosure of
the purchase price under any option to purchase the leased vehicle.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB433, s. 1
1Section
1. 218.01 (1) (ar) of the statutes is renumbered 218.01 (1) (jf) and
2amended to read:
AB433,2,43
218.01
(1) (jf) "
Capitalized
Gross capitalized cost" has the meaning given in s.
4429.104
(5) (13m).
AB433, s. 2
5Section
2. 218.01 (3) (a) 18. of the statutes is amended to read:
AB433,3,56
218.01
(3) (a) 18. Having accepted an order or contract of purchase from a buyer
7or a consumer lease or prelease agreement from a lessee or prospective lessee if such
8arrangement results in the practice of bushing. For the purpose of this section,
9"bushing" means, with respect to an order or contract of purchase, the practice of
10increasing the selling price of a motor vehicle above that originally quoted the
11purchaser as evidenced by a purchase order or contract which has been signed by
1both the purchaser and dealer licensee and, with respect to a consumer lease or
2prelease agreement, the practice of increasing the
gross capitalized cost above that
3originally quoted the lessee or prospective lessee as evidenced by a consumer lease
4or prelease agreement which has been signed by both the lessee or prospective lessee
5and the dealer licensee.
AB433, s. 3
6Section
3. 218.01 (6x) (e) of the statutes is amended to read:
AB433,3,107
218.01
(6x) (e) No prelease agreement may contain a clause which, upon
8nonacceptance of the motor vehicle by the prospective lessee, would subject the
9prospective lessee to a penalty greater than 5% of the
gross capitalized cost of the
10vehicle.
AB433, s. 4
11Section
4. 429.104 (1) of the statutes is amended to read:
AB433,3,1412
429.104
(1) "Adjusted capitalized cost" means the amount computed by
13subtracting from capitalized cost any capitalized cost reduction, for the purpose of
14determining the base
lease periodic payment.
AB433, s. 5
15Section
5. 429.104 (3) of the statutes is amended to read:
AB433,3,1916
429.104
(3) "Average periodic
lease rent charge" means the
lease rent charge
17for the scheduled term of the consumer lease divided by the number of payment
18periods under the consumer lease or, for a single-payment lease, the number of
19months in the term of the lease.
AB433, s. 6
20Section
6. 429.104 (3m) (intro.) of the statutes is amended to read:
AB433,3,2121
429.104
(3m) (intro.) "Balance subject to a
lease rent charge" means:
AB433, s. 7
22Section
7. 429.104 (3m) (a) of the statutes is amended to read:
AB433,4,223
429.104
(3m) (a) In the case of a lease other than a single-payment lease, the
24amount calculated by subtracting from the adjusted capitalized cost the sum of the
1first base
lease periodic payment and all depreciation amounts accrued during any
2preceding payment periods.
AB433, s. 8
3Section
8. 429.104 (3m) (b) of the statutes is amended to read:
AB433,4,64
429.104
(3m) (b) In the case of a single-payment lease, the amount calculated
5by subtracting the total
lease rent charge from the sum of the residual value and all
6lease rent charges accrued during any preceding computational periods.
AB433, s. 9
7Section
9. 429.104 (4) (intro.) of the statutes is amended to read:
AB433,4,98
429.104
(4) (intro.) "Base
lease
periodic payment" means an amount
9determined as follows:
AB433, s. 10
10Section
10. 429.104 (4) (a) of the statutes is amended to read:
AB433,4,1311
429.104
(4) (a) With respect to a single-payment lease, the product of the
12number of months in the scheduled term of the lease multiplied by the sum of the
13average periodic
lease rent charge and the average periodic depreciation.
AB433, s. 11
14Section
11. 429.104 (4) (b) of the statutes is amended to read:
AB433,4,1615
429.104
(4) (b) With respect to a lease other than a single-payment lease, the
16sum of the average periodic
lease rent charge and the average periodic depreciation.
AB433, s. 12
17Section
12. 429.104 (5) of the statutes is renumbered 429.104 (13m) and
18amended to read:
AB433,5,819
429.104
(13m) "
Capitalized Gross capitalized cost" means the sum of all
20amounts capitalized in the consumer lease that, after subtracting the capitalized
21cost reduction, amortizes to the residual value by the depreciation portion of the
22periodic lease payments over the scheduled term of the lease or, for a single-payment
23lease, the single payment. These amounts may include taxes; fees for registration,
24license, acquisition, administration and assignment; other fees; charges for
25insurance, service contracts and extended warranties; and charges for a waiver of the
1contractual obligation to pay the gap amount, for accessories and their installation,
2for other services and benefits incidental to the consumer lease, and for delivering,
3servicing, repairing or improving the vehicle. With respect to a vehicle or other
4property traded in connection with a consumer lease, the term may include the
5outstanding unpaid balance of the amount financed under a consumer loan, as
6defined in s. 421.301 (12), or a retail instalment contract, as defined in s. 218.01 (1)
7(t), or the unpaid balance of any early termination costs under a lease or other
8obligation of the lessee. The term does not include any
lease rent charge.
AB433, s. 13
9Section
13. 429.104 (6) of the statutes is amended to read:
AB433,5,1410
429.104
(6) "Capitalized cost reduction" means the sum, at the time of
11inception of the consumer lease, of any payments made by cash, check, rebates or the
12like that constitute a downpayment made by the lessee and the net amount credited
13by the lessor for any trade-in. The term does not include any base
lease periodic 14payments due at the inception of the consumer lease.
AB433, s. 14
15Section
14. 429.104 (16) of the statutes is renumbered 429.104 (23m) and
16amended to read:
AB433,5,1917
429.104
(23m) "
Lease Rent charge" means the sum of all charges payable by
18the lessee for the privilege of making the scheduled lease payments under a
19consumer lease. The term does not include
gross capitalized cost.
AB433, s. 15
20Section
15. 429.104 (24) of the statutes is amended to read:
AB433,5,2321
429.104
(24) "Residual value" means the estimated value of the leased vehicle
22at the expiration of the lease term that is used in the consumer lease to determine
23the depreciation portion of the base
lease periodic payment.
AB433, s. 16
24Section
16. 429.203 (2m) (form) (d) of the statutes is repealed.
AB433, s. 17
1Section
17. 429.203 (2m) (form) (e) of the statutes is renumbered 429.203 (2m)
2(form) (d).
AB433, s. 18
3Section
18. 429.203 (3) (a) of the statutes is amended to read:
AB433,6,114
429.203
(3) (a) The
gross capitalized cost, using the term "
gross capitalized
5cost", and an explanation of the term in substantially the following language: "The
6gross capitalized cost is the agreed-upon
amount determined at the inception of the
7consumer lease for all items and services included in the lease other than the charges
8you pay for the privilege of making the scheduled lease payments
value of the vehicle
9($.... [insert the agreed-upon value of the vehicle]) and any items that you pay over
10the lease term (such as service contracts, insurance and any outstanding prior loan
11or lease balance)."
AB433, s. 19
12Section
19. 429.203 (3) (b) of the statutes is amended to read:
AB433,6,1713
429.203
(3) (b) Any capitalized cost reduction, using the term "capitalized cost
14reduction", and an explanation of the term in substantially the following language:
15"The capitalized cost reduction is
any cash, check, rebate or the like and, if
16applicable, net trade-in allowance the amount of any net trade-in allowance, rebate,
17noncash credit or cash that you pay that reduces the
gross capitalized cost."
AB433, s. 20
18Section
20. 429.203 (3) (c) of the statutes is amended to read:
AB433,6,2519
429.203
(3) (c) The adjusted capitalized cost, using the term "adjusted
20capitalized cost", and an explanation of the term, as applicable, in substantially the
21following language: "The adjusted capitalized cost is the agreed-upon amount that
22serves as the basis for determining the base lease payment. If you are not in default
23on the consumer lease, this amount (plus any applicable early termination charges)
24determines your maximum early termination obligation is used in calculating your
25base periodic payment."
AB433, s. 21
1Section
21. 429.203 (3) (d) of the statutes is amended to read:
AB433,7,72
429.203
(3) (d) The residual value of the leased vehicle, using the term
3"residual value", and an explanation of the term in substantially the following
4language: "The residual value is the
estimated value of the leased vehicle at the end
5of the lease term that is used in determining the depreciation portion of the base lease
6payment. Your purchase option price, if any, may be a different amount value of the
7vehicle at the end of the lease used in calculating your base periodic payment."
AB433, s. 22
8Section
22. 429.203 (3) (e) 1. of the statutes is amended to read:
AB433,7,119
429.203
(3) (e) 1. With respect to a single-payment lease, a statement of the
10lease rent charge included in the single payment and a separate statement of the
11depreciation portion of the single payment.
AB433, s. 23
12Section
23. 429.203 (3) (e) 2. of the statutes is amended to read:
AB433,7,1513
429.203
(3) (e) 2. With respect to a lease other than a single-payment lease, a
14statement of the
lease rent charge included in the total of the periodic payments and
15a separate statement of the depreciation portion of the total of the periodic payments.
AB433, s. 24
16Section
24. 429.203 (3) (f) of the statutes is repealed.
AB433, s. 25
17Section
25. 429.203 (6) (c) of the statutes is amended to read:
AB433,7,2418
429.203
(6) (c) If the lessee does not purchase, maintain in force and provide
19satisfactory proof of insurance against loss of or damage to the leased vehicle and
20against liability arising out of the ownership, maintenance or use of the leased
21vehicle, the lessor may purchase motor vehicle insurance to protect the lessor's
22interest in the leased vehicle and against the lessor's liability arising out of the
23ownership, maintenance or use of the leased vehicle. The lessor may include the cost
24of such insurance in the
lease rent charge.
AB433, s. 26
25Section
26. 429.207 (2) (f) 1. of the statutes is amended to read: