Chapter 5: Your Legal Rights
Truth in Lending Act
The Truth in Lending Act requires lenders to provide a clear written disclosure of the terms of borrowing. As discussed previously, if you are getting a car loan, the lender must give you a Truth in Lending Disclosure Statement, which shows the amount you are financing, annual percentage rate, finance charges, payment amount, number of payments, and whether there are any late-payment or pre-payment penalties.
Consumer Leasing Act
If you are leasing a vehicle, you have a right to know the terms of the lease, including the:
- Total amount due at lease signing
- Monthly payment amount and total number of payments
- Annual mileage allowance and per mileage charge for extra miles
- Rent charge
- Depreciation charge
- Disposition fee (fee charged at end of lease term, typically waived if vehicle is purchased)
- Whether the car can be purchased at the end of lease
- Residual value/price of the car at the end of lease
Almost every state has a law designed to protect consumers who purchase a “lemon” – a car with significant defects. If your car turns out to be a lemon, you may be entitled to a new one or a refund of the purchase price. The law generally only applies to new cars, not used ones. The defects must significantly impact the car’s safety and/or usability, and you must attempt to have the defects fixed a specific number of times (determined by state statute) before the car can be declared a lemon. Visit your state attorney general’s website for information about your state’s lemon law.
If you purchase a car with defects, you do not necessarily need to resort to the lemon law to obtain a resolution. The dealership and/or manufacturer may be more than willing to work with you. You can also contact the Better Business Bureau’s “BBB Auto Line” (bbb.org, (800) 955-5100), which arbitrates warranty disputes between consumers and participating manufacturers.
Now that you are an expert on buying cars, you can go out there and look with confidence!