Whether you’re a business professional interested in learning more about the laws surrounding consumer leasing or a consumer wanting to understand the implications of leasing rather than ownership, the Consumer Leasing Act (CLA) is an important piece of legislation to understand. This Act, passed in 1976, is a federal statute intended to protect consumers from deceptive business practices when leasing a vehicle for personal use.
Leasing Explained
Leasing allows you to use something owned by another company or individual for a period of time in exchange for payment. Automobiles are the most popular items to lease, although leasing can extend to anything from electrical equipment to office furniture, clothing, or even pet supplies. Leasing agreements are beneficial for both consumers and businesses. Consumers can access products they may not otherwise be able to afford, while businesses may benefit from the immediate tax advantages associated with leasing rather than ownership.
Consumer Protection
The Consumer Leasing Act was created as a form of consumer protection, particularly related to vehicles. Prior to the passing of the CLA, leasing an automobile was a risky endeavor filled with hidden fees, additional costs, and unclear information about the terms of the lease. The CLA established strong consumer rights by requiring that all leasing agreements be in writing and that key information, such as the total cost, length of the lease, and total amount due at signing, be included in the agreement.
Modern Applications of the CLA
Today, the CLA still applies to consumer vehicle leasing, and businesses must adhere to these standards when offering leases. The Act also applies to many other forms of consumer leasing of both tangible and intangible objects, such as software leasing and long-term rental agreements. Understanding the rules of the CLA allows for safer and more informed transactions between consumers and businesses.