ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, November 22, 1996 TAG: 9611220053
SECTION: BUSINESS PAGE: A-10 EDITION: METRO
DATELINE: WASHINGTON
Lease a car for just a penny down? Nice, but don't count on it, the government said Thursday in announcing that five major automakers have agreed to stop burying important leasing costs in the fine print at the bottom of their advertisements.
From now on, details of those costs - such as taxes, title and registration fees - must be displayed as boldly as the print that blares ``Zero Down,'' said Federal Trade Commission chairman Robert Pitofsky.
``These disclosures are important and add hundreds and thousands of dollars to the cost,'' he said at a news conference. ``The problem is they are not readable and they are not understandable.''
The agreements with the FTC require General Motors Corp. and the U.S. subsidiaries of Honda, Isuzu, Mazda and Mitsubishi to include clear and understandable cost information in their nationwide advertising.
One-third of all new cars in this country are leased. That figure is expected to grow to half of all cars by the turn of the century, said Mary Ponder of the Consumer Federation of America.
Leasing is an appealing alternative among shoppers who can't afford to buy a new car, the average price of which has climbed to $21,600, said the National Automobile Dealers Association. Monthly payments for a new car can be up to 50 percent higher than the monthly cost of a leased vehicle.
``That seems to be the bottom line, `How much do I pay each month?' and that isn't the whole story,'' Ponder said.
But car leases also have led to a growing number of consumer complaints as shoppers gripe that they often don't know before they get to the showroom how much it will cost to drive away a new set of wheels.
``I don't think people are that naive,'' said Don Peck, vice president of Bob Peck Chevrolet in Arlington, Va. ``They know they're going to have to pay taxes and tags and a security deposit. Even on ones with zero down.''
Donna Reichle, spokeswoman for the National Automobile Dealers Association, believes consumers know to look at the ``small print for those hidden costs.''
In September, the Federal Reserve Board approved new rules to reduce confusion over car leasing contracts by requiring dealers to give consumers a single page explaining the agreement's key elements. That would include the base price of the car, the monthly payment and how it was calculated, and possible penalties for ending the lease early.
The requirement takes effect in October 1997.
None of the five companies that settled with the FTC admitted wrongdoing.
The agreements do not require refunds for consumers who believe they were cheated on a lease deal.
LENGTH: Medium: 54 linesby CNB