Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Disclosures for lease financing provided
in accordance with section
22802 of the code shall comply
with the following requirements.
(1) The
provider shall present the disclosures in a table consisting of eight rows and
three columns.
(2) The first row of
the table shall include only the following information:
(A) In the first column: "Funding
Provided".
(B) In the second
column, the amount financed.
(C) In
the third column: "This is how much funding [name of financer] will
provide."
(3) The second
row of the table shall include only the following information:
(A) In first column: "Annual Percentage Rate
(APR)".
(B) In second column, the
annual percentage rate calculated in accordance with section
940.
(C) In the third column:
"APR is the cost of your financing expressed as a yearly
rate. APR incorporates the amount and timing of the funding you receive, fees
you pay, the periodic payments you make, and the anticipated cost for you to
acquire the property at the end of the lease term.
Your APR is not an interest rate."
(4) The third row of the table shall include
only the following information:
(A) In first
column: "Finance Charge".
(B) In
second column, the total finance charge, calculated in accordance with section
943.
(C) In the third column, the provider's
calculation of the finance charge, with the amount and description of each
expense included in the finance charge.
(5) The fourth row of the table shall include
only the following information:
(A) In the
first column: "Total Payment Amount".
(B) In the second column, the total dollar
amount of payments the recipient will make during the term of the contract if
the recipient makes minimum required payments and exercises the purchase option
under the agreement.
(C) In the
third column: "This is the total dollar amount of payments you will make during
the term of the contract (including the cost of the purchase
option)."
(6) The fifth
row of the table shall include only the following information:
(A) In the first column: "Payment".
(B) If periodic payments during the term of
the transaction will not vary:
(i) In the
second column, the amount of each periodic payment followed by a forward slash
(/) and the frequency of each periodic payment (e.g., month, day, or other
period), followed by the date and amount of any irregular payments listed in
chronological order, followed by the price of the purchase option.
(ii) In the third column, a short explanation
of the payment and purchase option. For example: "This is how much you will pay
each month, the $300 maintenance fee due 12 months after you receive funding,
and the purchase price you may pay at the end of the lease to acquire the
property." The provider may also include a short explanation describing when
each payment will become due. For example: "Your monthly payments are due on
the 1st day of every month."
(C) If periodic payments during the term of
the transaction vary, the second and third column in the fourth row shall be
combined and the provider shall list the periodic payment amounts and when each
amount will become due, followed by the date and amount of any irregular
payments listed in chronological order, followed by the price of the purchase
option. For example:
Months 1-12: $600/month
Months 13-24: $1200/month
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
Purchase Price: $1000.
Or
Payments 1-23: $600/month
Payment 24: $2000.
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
Purchase Price: $1000.
(7) The sixth row of the table shall include
no information in the third column, and the remaining columns shall include
only the following information:
(A) In first
column: "Term".
(B) In second
column, the term of the transaction.
(8) In the first column, the seventh and
eighth rows shall be combined and shall include the following language:
"Prepayment".
(9) In the seventh
row, the second and third columns shall be combined and include only:
(A) If, at any time during the term of the
transaction, prepayment of the outstanding balance due will require the
recipient to pay finance charges other than interest accrued since the
recipient's last payment, the following statement: "If you pay off the
financing before the end of the term, you will be required to pay all or a
portion of the finance charge other than accrued and unpaid interest, up to
$[maximum non-interest finance charge]."
(B) In all other cases, the following
statement: "If you pay off the financing before the end of the term, you will
not be required to pay any portion of the finance charge other than unpaid
interest accrued."
(10)
In the eighth row, the second and third columns shall be combined and shall
include only:
(A) If, at any time during the
term of the transaction, prepayment of the outstanding balance due will require
the recipient to pay additional fees and charges not included in the finance
charge, the following statement: "If you pay off the financing before the end
of the term, you must pay additional fees or charges, including" followed by a
description of any prepayment charges.
(B) In all other cases, the following
statement: "If you pay off the financing before the end of the term, you will
not be required to pay additional fees or charges."
(11) If the contract provides for periodic
payments that are not monthly, the provider shall insert one additional row
below the fourth row, and the additional row shall include only the following
information:
(A) In the first column:
"Average Monthly Cost".
(B) In the
second column, the average monthly cost that the recipient will pay over the
term of the transaction.
(C) In the
third column, language explaining that the recipient will not be required to
make monthly payments and explaining how the provider has calculated the
monthly cost. For example: "Although you do not make payments on a monthly
basis, this is our calculation of your average monthly cost based upon the
payment amounts disclosed below."
1. New section
filed 6-9-2022; operative 12-9-2022 pursuant to Government Code section
11343.4(b)(2)
(Register 2022, No. 23). Transmission deadline specified in Government Code
section
11346.4(b)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order N-71-20. Filing deadline specified
in Government Code section
11349.3(a)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order N-71-20.
Note: Authority cited: Sections
321 and
22804,
Financial Code. Reference: Sections
22800,
22802 and
22804,
Financial Code.
