PART 1013—CONSUMER LEASING (REGULATION M) Authority: 15 U.S.C. 1604 and 1667f; Pub. L. 111-203 section 1100E, 124 Stat. 1376. Source: 76 FR 78502, Dec. 19, 2011, unless otherwise noted. § 1013.1 Authority, scope, purpose, and enforcement. (a) Authority. et seq. et seq. (b) Scope and purpose. (1) To ensure that lessees of personal property receive meaningful disclosures that enable them to compare lease terms with other leases and, where appropriate, with credit transactions; (2) To limit the amount of balloon payments in consumer lease transactions; and (3) To provide for the accurate disclosure of lease terms in advertising. (c) Enforcement and liability. § 1013.2 Definitions. For the purposes of this part the following definitions apply: (a) Act et seq. (b) Advertisement (c) Bureau (d) Closed-end lease (e)(1) Consumer lease (2) The term does not include a lease that meets the definition of a credit sale in Regulation Z (12 CFR 226.2(a)). It also does not include a lease for agricultural, business, or commercial purposes or a lease made to an organization. (3) This part does not apply to a lease transaction of personal property which is incident to the lease of real property and which provides that: (i) The lessee has no liability for the value of the personal property at the end of the lease term except for abnormal wear and tear; and (ii) The lessee has no option to purchase the leased property. (f) Gross capitalized cost Capitalized cost reduction adjusted capitalized cost (g) Lessee (h) Lessor (i) Open-end lease (j) Organization (k) Person (l) Personal property (m) Realized value (1) The price received by the lessor for the leased property at disposition; (2) The highest offer for disposition of the leased property; or (3) The fair market value of the leased property at the end of the lease term. (n) Residual value (o) Security interest security (p) State § 1013.3 General disclosure requirements. (a) General requirements. et seq. (1) Form of disclosures. (2) Segregation of certain disclosures. (3) Timing of disclosures. (4) Language of disclosures. (b) Additional information; nonsegregated disclosures. (c) Multiple lessors or lessees. (d) Use of estimates. (e) Effect of subsequent occurrence. (f) Minor variations. (1) That payments must be collected in whole cents; (2) That dates of scheduled payments may be different because a scheduled date is not a business day; (3) That months have different numbers of days; and (4) That February 29 occurs in a leap year. § 1013.4 Content of disclosures. For any consumer lease subject to this part, the lessor shall disclose the following information, as applicable: (a) Description of property. (b) Amount due at lease signing or delivery. (c) Payment schedule and total amount of periodic payments. (d) Other charges. (e) Total of payments. (f) Payment calculation. (1) Gross capitalized cost. (2) Capitalized cost reduction. (3) Adjusted capitalized cost. (4) Residual value. (5) Depreciation and any amortized amounts. (6) Rent charge. (7) Total of base periodic payments. (8) Lease payments. (9) Base periodic payment. (10) Itemization of other charges. (11) Total periodic payment. (g) Early termination Conditions and disclosure of charges. (2) Early termination notice. (h) Maintenance responsibilities. (1) Statement of responsibilities. (2) Wear and use standard. (3) Notice of wear and use standard. (i) Purchase option. (1) End of lease term. (2) During lease term. (j) Statement referencing nonsegregated disclosures. (k) Liability between residual and realized values. (l) Right of appraisal. (m) Liability at end of lease term based on residual value. (1) Rent and other charges. (2) Excess liability. (3) Mutually agreeable final adjustment. (n) Fees and taxes. (o) Insurance. (1) Through the lessor. (2) Through a third party. (p) Warranties or guarantees. (q) Penalties and other charges for delinquency. (r) Security interest. (s) Limitations on rate information. (t) Non-motor vehicle open-end leases. § 1013.5 Renegotiations, extensions, and assumptions. (a) Renegotiation. (b) Extension. (c) Assumption. (d) Exceptions. (1) A reduction in the rent charge; (2) The deferment of one or more payments, whether or not a fee is charged; (3) The extension of a lease for not more than six months on a month-to-month basis or otherwise; (4) A substitution of leased property with property that has a substantially equivalent or greater economic value, provided no other lease terms are changed; (5) The addition, deletion, or substitution of leased property in a multiple-item lease, provided the average periodic payment does not change by more than 25 percent; or (6) An agreement resulting from a court proceeding. § 1013.6 [Reserved] § 1013.7 Advertising. (a) General rule. (b) Clear and conspicuous standard. (1) Amount due at lease signing or delivery. (2) Advertisement of a lease rate. (c) Catalogs or other multipage advertisements; electronic advertisements. (d) Advertisement of terms that require additional disclosure Triggering terms. (i) The amount of any payment; or (ii) A statement of any capitalized cost reduction or other payment (or that no payment is required) prior to or at consummation or by delivery, if delivery occurs after consummation. (2) Additional terms. (i) That the transaction advertised is a lease; (ii) The total amount due prior to or at consummation or by delivery, if delivery occurs after consummation; (iii) The number, amounts, and due dates or periods of scheduled payments under the lease; (iv) A statement of whether or not a security deposit is required; and (v) A statement that an extra charge may be imposed at the end of the lease term where the lessee's liability (if any) is based on the difference between the residual value of the leased property and its realized value at the end of the lease term. (e) Alternative disclosures—merchandise tags. (f) Alternative disclosures—television or radio advertisements Toll-free number or print advertisement. (i) Lists a toll-free telephone number along with a reference that such number may be used by consumers to obtain the information required by paragraph (d)(2) of this section; or (ii) Directs the consumer to a written advertisement in a publication of general circulation in the community served by the media station, including the name and the date of the publication, with a statement that information required by paragraph (d)(2) of this section is included in the advertisement. The written advertisement shall be published beginning at least three days before and ending at least ten days after the broadcast. (2) Establishment of toll-free number. (ii) The lessor shall provide the information required by paragraph (d)(2) of this section orally, or in writing upon request. § 1013.8 Record retention. A lessor shall retain evidence of compliance with the requirements imposed by this part, other than the advertising requirements under § 1013.7, for a period of not less than two years after the date the disclosures are required to be made or an action is required to be taken. § 1013.9 Relation to state laws. (a) Inconsistent state law. (b) Exemptions Application. (i) The class of leasing transactions is subject to state law requirements substantially similar to the Act and this part or that lessees are afforded greater protection under state law; and (ii) There is adequate provision for state enforcement. (2) Enforcement and liability. Appendix A to Part 1013—Model Forms A-1—Model Open-End or Finance Vehicle Lease Disclosures A-2—Model Closed-End or Net Vehicle Lease Disclosures A-3—Model Furniture Lease Disclosures Appendix B to Part 1013 [Reserved] Appendix C to Part 1013—Issuance of Official Interpretations Interpretations of this part issued by officials of the Bureau provide the formal protection afforded under section 130(f) of the Act. Except in unusual circumstances, interpretations will not be issued separately but will be incorporated in an official commentary to Regulation M (Supplement I of this part), which will be amended periodically. No official interpretations will be issued approving a lessor's forms, statements, or calculation tools or methods. Supplement I to Part 1013—Official Interpretations Introduction 1. Official status. 2. Procedures for requesting interpretations. Federal Register. 3. Comment designations. 4. Illustrations. Section 1013.1—Authority, Scope, Purpose, and Enforcement 1. Foreign applicability. Section 1013.2—Definitions 2(b) Advertisement 1. Coverage. i. Messages in newspapers, magazines, leaflets, catalogs, and fliers. ii. Messages on radio, television, and public address systems. iii. Direct mail literature. iv. Printed material on any interior or exterior sign or display, in any window display, in any point-of-transaction literature or price tag that is delivered or made available to a lessee or prospective lessee in any manner whatsoever. v. Telephone solicitations. vi. Online messages, such as those on the Internet. 2. Exclusions. i. Direct personal contacts, including follow-up letters, cost estimates for individual lessees, or oral or written communications relating to the negotiation of a specific transaction. ii. Informational material distributed only to businesses. iii. Notices required by Federal or state law, if the law mandates that specific information be displayed and only the mandated information is included in the notice. iv. News articles controlled by the news medium. v. Market research or educational materials that do not solicit business. 3. Persons covered. 2(d) Closed-End Lease 1. General. 2(e) Consumer Lease 1. Primary purposes. 2. Period of time. i. A three-month lease extended on a month-to-month basis and terminated after one year is not subject to the regulation. ii. A month-to-month lease with a penalty, such as the forfeiture of a security deposit for terminating before one year, is subject to the regulation. 3. Total contractual obligation. i. Residual value amounts or purchase-option prices; ii. Amounts collected by the lessor but paid to a third party, such as taxes, licenses, and registration fees. 4. Credit sale. i. Agrees to pay as compensation for use a sum substantially equivalent to, or in excess of, the total value of the property and services involved; and ii. Will become (or has the option to become), for no additional consideration or for nominal consideration, the owner of the property upon compliance with the agreement. 5. Agricultural purpose. 6. Organization or other entity. 7. Leases of personal property incidental to a service. i. Home entertainment systems requiring the consumer to lease equipment that enables a television to receive the transmitted programming. ii. Security alarm systems requiring the installation of leased equipment intended to monitor unlawful entries into a home and in some cases to provide fire protection. iii. Propane gas service where the consumer must lease a propane tank to receive the service. 8. Safe deposit boxes. 9. Threshold amount. 10. No increase in the CPI-W. i. Net increases. ii. Net decreases. 11. Threshold. i. Prior to July 21, 2011, the threshold amount is $25,000. ii. From July 21, 2011, through December 31, 2011, the threshold amount is $50,000. iii. From January 1, 2012, through December 31, 2012, the threshold amount is $51,800. iv. From January 1, 2013, through December 31, 2013, the threshold amount is $53,000. v. From January 1, 2014, through December 31, 2014, the threshold amount is $53,500. vi. From January 1, 2015, through December 31, 2015, the threshold amount is $54,600. vii. From January 1, 2016, through December 31, 2016, the threshold amount is $54,600. viii. From January 1, 2017, through December 31, 2017, the threshold amount is $54,600. ix. From January 1, 2018, through December 31, 2018, the threshold amount is $55,800. x. From January 1, 2019, through December 31, 2019, the threshold amount is $57,200. xi. From January 1, 2020, through December 31, 2020, the threshold amount is $58,300. xii. From January 1, 2021, through December 31, 2021, the threshold amount is $58,300. xiii. From January 1, 2022, through December 31, 2022, the threshold amount is $61,000. xiv. From January 1, 2023, through December 31, 2023, the threshold amount is $66,400. xv. From January 1, 2024, through December 31, 2024, the threshold amount is $69,500. xvi. From January 1, 2025, through December 31, 2025, the threshold amount is $71,900. xvii. From January 1, 2026, through December 31, 2026, the threshold amount is $73,400. 2(g) Lessee 1. Guarantors. 2(h) Lessor 1. Arranger of a lease. i. An entity that, pursuant to a business relationship, completes the necessary lease agreement before forwarding it for execution to the leasing company (to whom the obligation is payable on its face) is “arranging” for the lease. ii. An entity that, without receiving a fee for the service, refers a customer to a leasing company that will prepare all relevant contract documents is not “arranging” for the lease. 2. Consideration. 3. Assignees. Ford Motor Credit Co. Cenance, 4. Multiple lessors. 2(j) Organization 1. Coverage. 2(l) Personal Property 1. Coverage. 2(m) Realized Value 1. General. 2. Options. 3. Determination of realized value. 4. Offers. 5. Lessor's appraisal. 2(o) Security Interest and Security 1. Disclosable interests. 2. General coverage. 3. Insurance exception. Section 1013.3—General Disclosure Requirements 3(a) General Requirements 1. Basis of disclosures. i. In a three-year lease with no penalty for termination after a one-year minimum term, disclosures are based on the full three-year term of the lease. The one-year minimum term is only relevant to the early termination provisions of §§ 1013.4 (g)(1), (k) and (l). 2. Clear and conspicuous standard. 3. Multipurpose disclosure forms. 4. Number of transactions. i. When a lessor leases two items to the same lessee on the same day, the lessor may disclose the leases as either one or two lease transactions. ii. When a lessor sells insurance or other incidental services in connection with a lease, the lessor may disclose in one of two ways: As a single lease transaction (in which case Regulation M, not Regulation Z, disclosures are required) or as a lease transaction and a credit transaction. iii. When a lessor includes an outstanding lease or credit balance in a lease transaction, the lessor may disclose the outstanding balance as part of a single lease transaction (in which case Regulation M, not Regulation Z, disclosures are required) or as a lease transaction and a credit transaction. 3(a)(1) Form of Disclosures 1. Cross-references. 2. Identification of parties. 3. Lessor's address. 4. Multiple lessors and lessees. 5. Lessee's signature. 3(a)(2) Segregation of Certain Disclosures 1. Location. 2. Additional information among segregated disclosures. 3. Substantially similar. 3(a)(3) Timing of Disclosures 1. Consummation. 3(b) Additional Information; Nonsegregated Disclosures 1. State law disclosures. 3(c) Multiple Lessors or Lessees 1. Multiple lessors. 3(d) Use of Estimates 1. Time of estimated disclosure. 2. Basis of estimates. 3. Residual value of leased property at termination. i. An automobile lessor offering a three-year open-end lease assigns a wholesale value to the vehicle at the end of the lease term. The lessor may disclose as an estimate a wholesale value derived from a generally accepted trade publication listing current wholesale values. ii. Same facts as above, except that the lessor discloses an estimated value derived by adjusting the residual value quoted in the trade publication because, in its experience, the trade publication values either understate or overstate the prices actually received in local used vehicle markets. The lessor may adjust estimated values quoted in trade publications if the lessor reasonably believes based on its experience that the values are understated or overstated. 4. Retail or wholesale value. 5. Labeling estimates. 3(e) Effect of Subsequent Occurrence 1. Subsequent occurrences. i. An agreement between the lessee and lessor to change from a monthly to a weekly payment schedule. ii. An increase in official fees or taxes. iii. An increase in insurance premiums or coverage caused by a change in the law. iv. Late delivery of an automobile caused by a strike. 2. Redisclosure. 3. Lessee's failure to perform. Section 1013.4—Content of Disclosures 4(a) Description of Property 1. Placement of description. 4(b) Amount Due at Lease Signing or Delivery 1. Consummation. 2. Capitalized cost reduction. 3. “Negative” equity trade-in allowance. 4. Rebates. 5. Balance sheet approach. 6. Amounts to be paid in cash. 4(c) Payment Schedule and Total Amount of Periodic Payments 1. Periodic payments. 4(d) Other Charges 1. Coverage. 2. Excluded charges. i. Late payment. ii. Default. iii. Early termination. iv. Deferral of payments. v. Extension of the lease. 3. Third-party fees and charges. 4. Relationship to other provisions. i. The price of a mechanical breakdown protection (MBP) contract is sometimes disclosed as an “other charge.” Nevertheless, the price of MBP is sometimes reflected in the periodic payment disclosure under § 1013.4(c) or in states where MBP is regarded as insurance, the cost is be disclosed in accordance with § 1013.4(o). 5. Lessee's liabilities at the end of the lease term. 6. Optional “disposition” charges. 4(e) Total of Payments 1. Open-end lease. 4(f) Payment Calculation 1. Motor vehicle lease. 2. Multiple items. 4(f)(1) Gross Capitalized Cost 1. Agreed upon value of the vehicle. 2. Itemization of the gross capitalized cost. 4(f)(7) Total of Base Periodic Payments 1. Accuracy of disclosure. 4(f)(8) Lease Payments 1. Lease Term. 4(g) Early Termination 4(g)(1) Conditions and Disclosure of Charges 1. Reasonableness of charges. 2. Description of the method. 3. Timing of written explanation of a named method. 4. Default. 5. Lessee's liability at early termination. 4(h) Maintenance Responsibilities 1. Standards for wear and use. 4(i) Purchase Option 1. Mandatory disclosure of no purchase option. 2. Existence of purchase option. 3. Purchase-option fee. 4. Official fees and taxes. 5. Purchase-option price. 4(j) Statement Referencing Nonsegregated Disclosures 1. Content. 4(l) Right of Appraisal 1. Disclosure inapplicable. i. The automobile lessor might expect a lessee to return an undented car with four good tires at the end of the lease term. Even though it may hold the lessee liable for the difference between a dented car with bald tires and the value of a car in reasonably good repair, the disclosure under § 1013.4(l) is not required. 2. Lessor's appraisal. 3. Retail or wholesale. 4. Time restriction on appraisal. 4(m) Liability at End of Lease Term Based on Residual Value 1. Open-end leases. 2. Lessor's payment of attorney's fees. 4(m)(1) Rent and Other Charges 1. General. 4(m)(2) Excess Liability 1. Coverage. 2. Leases with a minimum term. 3. Charges not subject to rebuttable presumption. i. Disposition charges. ii. Excess mileage charges. iii. Late payment and default charges. iv. In simple-interest accounting leases, amount by which the unamortized cost exceeds the residual value because the lessee has not made timely payments. 4(n) Fees and Taxes 1. Treatment of certain taxes. i. Taxes paid by lease signing or delivery are disclosed under § 1013.4(b) and § 1013.4(n). ii. Taxes that are part of the scheduled payments are reflected in the disclosure under § 1013.4(c), (f), and (n). iii. A tax payable by the lessor that is passed on to the consumer and is reflected in the lease documentation must be disclosed under § 1013.4(n). A tax payable by the lessor and absorbed as a cost of doing business need not be disclosed. iv. Taxes charged in connection with the exercise of a purchase option are disclosed under § 1013.4(i), not § 1013.4(n). 2. Estimates. 4(o) Insurance 1. Coverage. 2. Lessor's insurance. 3. Mechanical breakdown protection and other products. 4(p) Warranties or Guarantees 1. Brief identification. 2. Warranty disclaimers. 3. State law. 4(q) Penalties and Other Charges for Delinquency 1. Collection costs. 2. Charges for early termination. 3. Simple-interest leases. 4. Extension charges. 5. Reasonableness of charges. 4(r) Security Interest 1. Disclosable security interests. 4(s) Limitations on Rate Information 1. Segregated disclosures. Section 1013.5—Renegotiations, Extensions, and Assumptions 1. Coverage. 5(a) Renegotiation 1. Basis of disclosures. i. If the renegotiated lease covers the 36-month period beginning January 1, 1998, the new disclosures would reflect all payments made by the lessee on the initial lease and all payments on the renegotiated lease. In this example, since the renegotiated lease covers a 36-month period beginning January 1, 1998, the disclosures must reflect payments made since that date. On the model form, the “total of base periodic payments” disclosed under § 1013.4(f)(7) should reflect periodic payments to be made over the entire 36-month term. Payments received since January 1, 1998, are added as a new line item disclosed as “total of payments received” and are subtracted from the “total of base periodic payments” in calculating a new item disclosed as the “total of base periodic payments remaining.” For example, if 6 monthly payments of $300 were received since January 1, 1998, the disclosure form should include a “total of base periodic payments” line from which $1,800 is subtracted to arrive at the “total of base periodic payments remaining.” The remainder of the disclosures would not change. ii. If the renegotiated lease covers only the remaining 30 months, from July 1, 1998, to January 1, 2001, the disclosures would reflect only the charges incurred in connection with the renegotiation and the payments for the remaining period. 5(b) Extension 1. Time of extension disclosures. 2. Content of disclosures for month-to-month extensions. 3. Basis of disclosures. Section 1013.6 [Reserved] Section 1013.7—Advertising 7(a) General Rule 1. Persons covered. 2. “Usually and customarily.” 3. Total contractual obligation of advertised lease. i. Assume that, in an advertisement, a lessor states that certain terms apply to a consumer lease for a specific automobile. The total contractual obligation of the advertised lease exceeds the threshold amount in effect when the advertisement is made. Although the advertisement does not refer to any other lease, some or all of the advertised terms for the exempt lease also apply to other leases offered by the lessor with total contractual obligations that do not exceed the applicable threshold amount. The advertisement is not required to comply with § 1013.7 because it refers only to an exempt lease. ii. Assume that, in an advertisement, a lessor states certain terms (such as the amount due at lease signing) that will apply to consumer leases for automobiles of a particular brand. However, the advertisement does not refer to a specific lease. The total contractual obligations of the leases for some of the automobiles will exceed the threshold amount in effect when the advertisement is made, but the total contractual obligations of the leases for other automobiles will not exceed the threshold. The entire advertisement must comply with § 1013.7 because it refers to terms for consumer leases that are not exempt. iii. Assume that, in a single advertisement, a lessor states that certain terms apply to consumer leases for two different automobiles. The total contractual obligation of the lease for the first automobile exceeds the threshold amount in effect when the advertisement is made, but the total contractual obligation of the lease for the second automobile does not exceed the threshold. The entire advertisement must comply with § 1013.7 because it refers to a consumer lease that is not exempt. 7(b) Clear and Conspicuous Standard 1. Standard. 7(b)(1) Amount Due at Lease Signing or Delivery 1. Itemization not required. 2. Prominence rule. 7(b)(2) Advertisement of a Lease Rate 1. Location of statement. 7(c) Catalogs or Other Multi-Page Advertisements; Electronic Advertisements 1. General rule. 2. Cross references. 7(d)(1) Triggering Terms 1. Typical example. 7(d)(2) Additional Terms 1. Third-party fees that vary by state or locality. i. Exclude third-party fees, such as taxes, licenses, and registration fees and disclose that fact; or ii. Provide a periodic payment or total that includes third-party fees based on a particular state or locality as long as that fact and the fact that fees may vary by state or locality are disclosed. 7(e) Alternative Disclosures—Merchandise Tags 1. Multiple-item leases. 7(f) Alternative Disclosures—Television or Radio Advertisements 7(f)(1) Toll-Free Number or Print Advertisement 1. Publication in general circulation. 2. Toll-free number, local or collect calls. 3. Multi-purpose number. 4. Statement accompanying toll free number. Section 1013.8—Record Retention 1. Manner of retaining evidence. Section 1013.9—Relation to State Laws 1. Exemptions granted. i. Maine. ii. Oklahoma. Appendix A—Model Forms 1. Permissible changes. 2. Examples of acceptable changes. i. Using the first person, instead of the second person, in referring to the lessee. ii. Using “lessee,” “lessor,” or names instead of pronouns. iii. Rearranging the sequence of the nonsegregated disclosures. iv. Incorporating certain state “plain English” requirements. v. Deleting or blocking out inapplicable disclosures, filling in “N/A” (not applicable) or “0,” crossing out, leaving blanks, checking a box for applicable items, or circling applicable items (this should facilitate use of multipurpose standard forms). vi. Adding language or symbols to indicate estimates. vii. Adding numeric or alphabetic designations. viii. Rearranging the disclosures into vertical columns, except for § 1013.4(b) through (e) disclosures. ix. Using icons and other graphics. 3. Model closed-end or net vehicle lease disclosure. 4. Model furniture lease disclosures. [76 FR 78502, Dec. 19, 2011, as amended at 76 FR 81790, Dec. 29, 2011; 77 FR 69736, Nov. 21, 2012; 79 FR 70194, Nov. 25, 2013; 79 FR 56483, Sept. 22, 2014; 80 FR 73947, Nov. 27, 2015, as amended at 81 FR 86259, Nov. 30, 2016; 82 FR 51977, Nov. 9, 2017; 83 FR 59276, Nov. 23, 2018; 84 FR 58019, Oct. 30, 2019; 85 FR 79393, Dec. 10, 2020; 86 FR 67850, Nov. 30, 2021; 87 FR 63669, Oct. 20, 2022; 88 FR 83321, Nov. 29, 2023; 89 FR 82937, Oct. 15, 2024; 90 FR 57881, Dec. 15, 2025]