More Information about Returning the Vehicle and Paying Any Amounts Owed or Receiving Any Surplus

You may return the vehicle at the end of an open-end lease. In an open-end lease, you are responsible for any difference if the actual value of the vehicle at scheduled termination is less than the residual value stated in your lease. However, federal law establishes a three-payment rule that may limit your lease-end liability, as described below. Conversely, in most open-end leases you are entitled to a refund if the actual value is greater than the residual value stated in your lease. Example

If you return the vehicle to the lessor at the scheduled end of the term, a turn-in date will be arranged, at which time the vehicle will be inspected for excessive wear and tear or other damages and the vehicle's odometer will be checked for excess mileage. Some lessors also require or permit you to have the vehicle inspected for excessive wear and excess mileage before the scheduled termination date. Early inspection gives you notice of any expected excessive wear or excess mileage charges.

Three-payment rule. The Consumer Leasing Act provides consumers with some protections against unreasonable end-of-term charges in open-ended leases. Assuming that you have met the mileage and wear standards, the residual value is considered unreasonable if it exceeds the realized value by more than three times the base monthly payment. If you believe the amount owed at the end of the lease term is unreasonable and refuse to pay, the lessor or assignee may attempt to prove that the residual value was reasonable when it was set at the beginning of the lease. However, if you cannot reach a settlement with the lessor or assignee, you cannot be forced to pay the excess amount unless the lessor or assignee brings a successful court action and pays your reasonable attorney's fees. (See the glossary entry Open-end lease.) Example