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H 8243Rights & Warranties

Commercial Law - General Regulatory Provisions - Deceptive Trade Practices

Requires car lease agreements to disclose that upfront payments are not refundable if the vehicle is totaled.

Held for study
Population
Affected
15
Email Legislator
Introduced Mar 6, 2026Committee House Corporations

Plain-English Summary

This legislation updates Rhode Island's deceptive trade practice laws regarding motor vehicle leases. It specifically prohibits car dealerships and finance companies from using terms like "down payment" or "money down" to describe upfront payments made on a lease. Instead, these agreements must include a clear disclosure, in a specific font size, stating that any money paid upfront to lower monthly payments will not be returned if the vehicle is totaled or declared a total loss. The bill aims to prevent consumers from misunderstanding the financial risks of making large upfront payments on leased vehicles.

For younger readers

When people rent a car for a long time, called a lease, they sometimes pay extra money at the start to make their monthly bills smaller. This bill changes the rules for the companies that lease these cars. The companies are no longer allowed to call that extra money a "down payment." They also have to give the customer a clear warning paper to sign. This paper explains that if the car gets wrecked and cannot be fixed (totaled), the customer will not get that extra money back.

Who & Where It Applies

Impacted groups
Car DealershipsAuto Leasing CompaniesCar LesseesConsumer Protection AttorneysAuto Finance Lenders
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
None
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Protect consumers from misleading financial terminology that suggests equity ownership, such as "down payment," thereby reducing financial exploitation by dealerships.
  • Increases transparency for low-income and working-class individuals who might otherwise lose significant savings if a leased vehicle is totaled shortly after signing.
  • Empowers consumers with plain language disclosures, helping level the playing field between powerful corporate lenders and individual borrowers.
  • Does not actually prohibit the practice of finance companies keeping the upfront payments in the event of a total loss, but merely requires they disclose it.
  • Relies on individual enforcement through voiding contracts within 30 days, which places the burden on the consumer rather than establishing a state enforcement mechanism.
  • May inadvertently discourage leasing, which is often the only way lower-income individuals can access reliable transportation, by highlighting the financial risks without offering a safety net.
For Conservatives
  • Ensures the integrity of contracts by verifying that all parties fully understand the terms and risks associated with the financial agreement.
  • Maintains a free market approach by mandating disclosure rather than banning the specific financial product or the collection of upfront payments.
  • Clarifies definitions within the law, potentially reducing frivolous lawsuits based on ambiguity regarding what constitutes a "down payment" versus a capital cost reduction.
  • Imposes government overreach by micromanaging the specific vocabulary ("down payment") private businesses are allowed to use in their commercial interactions.
  • Creates additional regulatory burdens and paperwork for businesses by mandating specific font sizes and separate signature requirements.
  • Interferes with the freedom of contract between a buyer and seller by declaring non-compliant contracts voidable, potentially harming business revenue stability.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 9 additions · 1 deletion

SECTION 1. Section 6-13.1-28 of the General Laws in Chapter 6-13.1 entitled "Deceptive Trade Practices" is hereby amended to read as follows: 6-13.1-28. Financing of motor vehicles — Term and rate of interest prominently displayed.

(a) Any contract to finance the sale of a motor vehicle shall prominently display the term and rate of interest.

(b) The borrower’s initials or signature shall appear immediately adjacent to the term and to the rate of interest on the loan agreement that shall only serve as an acknowledgement that the borrower has been informed of the terms and rate. The borrower shall also be required to separately sign the loan agreement to bind himself or herself to the contract.

(c) No contract to finance the lease of a motor vehicle shall use the term "down payment", "money down", or any similar language to describe lump sum payments made at the time of financing to reduce monthly lease payments. The lessee shall be provided and required to acknowledge a plain language disclosure in at least eleven (11) point font that any lump sum money paid at the time of financing will not be returned if the vehicle is involved in an incident and determined to be a total loss, regardless of the circumstances. (c)(d) Any agreement to finance a motor vehicle that does not comply with the provision of this section shall be voidable within thirty (30) days at the option of the borrower; provided, however, the borrower shall be responsible for any damage to the vehicle.

SECTION 2. This act shall take effect upon passage.