CCCFA - Consumer leases

Lessor's obligations
Initial disclosure
Variation disclosure
Request disclosure
Termination

A consumer lease is a contract for hire where the lessee has a right to buy the goods, or the lease is for more than one year.

To be a consumer lease that is regulated under the Act:

• the lessee must be a natural person
• the lessee must enter the lease primarily for personal, domestic or household purposes
• the lessor must be in the business of leasing goods or make a practice of leasing goods in the course of a business   

• a combination of contracts that, in substance, creates a lease is to be treated as a consumer lease, even if no contract in itself creates a consumer lease
• a lessor may take a declaration from a lessee that the goods are hired primarily for personal, domestic or household purposes (the same rules apply as with declarations for credit contracts).

Lessor’s obligations?

The lessor’s obligations are similar to those applying to credit contracts.  

Initial disclosure

If you are a lessor, you must disclose as much of the following information that applies before the contract is made or within five working days:

•  your full name and address 
• the fact that the lease is a consumer lease under the Act 
• the term of the lease 
• the cash price of the goods leased
• whether the lessee has an option to buy the goods and, if so, the option price or how it is calculated 
• the amount, timing and number of payments to be made under the contract  
• any amount, such as a deposit, paid before the lease commences  
• the total amount payable by the lessee under the lease 
• a statement of the conditions upon which the lessee can terminate the lease  
• services financed under the lease  
• default fees payable upon breach of the contract 
• any other items prescribed by regulation.

You must also disclose any other terms of the lease within five working days of making the lease, and, if you arrange it, the terms of any credit-related insurance policy taken out in connection with the lease.

Variation disclosure

Any changes to a lease agreed by the parties must be disclosed to the lessee before they take effect.

Changes that reduce the lessee’s obligations do not have to be disclosed.

Request disclosure

A lessee may ask for information on:

• the amount, timing and number of payments to be made under the lease
• full particulars on any change made to the contract
• a copy of any disclosure statements made or that should have been made.

Termination

Lessees have no right to terminate a lease before the end of its term. However, if a lease is terminated, the amount they pay must not exceed a reasonable estimate of your loss caused by termination.

Note: Regulations may be made to prescribe a procedure for calculating the loss. At the time of publication no regulations have been made.