Prohibits disclosure terms "down payment", "money down", or any similar language to describe lump sum payments in order to reduce monthly lease payments. Provides that lump sum payments are non-refundable in the event of a total loss of the vehicle.
Impact
If enacted, the bill would have a significant impact on the interpretation and enforcement of commercial laws surrounding the financing and leasing of motor vehicles in Rhode Island. It would require lenders to provide plain language disclosures and to use terminology that accurately reflects the financial obligations of the borrower. Additionally, any agreements not adhering to these provisions would be rendered voidable within thirty days at the option of the borrower. This could discourage predatory lending practices and promote fairness within the automotive financing landscape.
Summary
House Bill 7943 seeks to amend existing regulations pertaining to the financing of motor vehicles in Rhode Island. Specifically, it prohibits the use of terms such as 'down payment' or 'money down' when describing lump sum payments that reduce monthly lease payments. The intent of this legislation is to enhance consumer awareness and protect borrowers from potential misunderstandings regarding the non-refundable nature of these payments in the event of a total loss of the vehicle. This change aims to ensure that all financial terms are clearly communicated to consumers at the time of financing.
Contention
While the bill has generated some support for its consumer protection measures, there may be concerns among lenders and financial institutions regarding the stricter language requirements and the implications for their leasing practices. Critics may argue that the changes could complicate the financing process or create legal challenges around compliance. However, supporters emphasize the necessity of safeguarding consumer rights and ensuring that potential borrowers fully understand their financial commitments when leasing vehicles.