ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Monday, September 16, 1996             TAG: 9609160031
SECTION: BUSINESS                 PAGE: A-4  EDITION: METRO 
DATELINE: WASHINGTON
SOURCE: Associated Press

FED MIGHT SIMPLIFY AUTO LEASE CONTRACTS

Those complex and confusing car lease contracts would be boiled down to a single page, in simple language, under a proposal before the Federal Reserve Board.

The Fed is expected to act Wednesday, requiring car dealers to disclose new details about leases on a single sheet. The goal is to improve consumer understanding of the deal, Robert McKew, general counsel for the American Financial Services Association, said Friday.

But a leading consumer activist, Janice Shields of U.S. Public Interest Research Group, said the rules don't go far enough, since they won't help consumers in the most basic decision: whether to buy or lease a new car.

``If you're told a monthly dollar amount for a lease and dollar amount for a loan, they're not comparable,'' Shields said.

``Consumers will make a decision on what fits their budget, and they might not realize they're paying 24 percent to 30 percent rate with a lease and they will not have a car at the end.''

McKew, whose group represents major auto finance companies, said the one-page sheet will accompany the longer, formal leasing contract.

``It will be a very straightforward, mathematic progression showing where the starting point is and ending point is,'' he said.

The new rules will affect millions of consumers, since leasing accounts for about one-quarter of new car sales.

The Fed is best known as a regulator of financial institutions. But it also has jurisdiction over lease transactions that last more than four months.

Details of the rules won't be available until next week's meeting, Fed spokesman Joseph Coyne said.

It's unclear how the Fed will address the issue of disclosing a lease in terms of an annual percentage rate, or APR.

The new rules would compel car dealers to spell out the basic price of the car, insurance and lease fees that are part of the total cost on which the monthly payments are based. Also required will be disclosure of other important elements of the lease, such as assumed depreciation charges and a vehicle's remaining value at the end of its lease.

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