Marks & Associates, P.C. 
CA Interest Rate Disclosure  - Update II

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California Rate Disclosure Bill
As the result of intense lobbying by ELFA, the sponsors of bill have agreed to incorporate the definition of lease found in California's UCC. This will replace the requirement that all leases with fixed purchase options be considered financings subject to the new law.
If passed in its current form, the bill will require disclosures in the case of loans, EFAs and "leases" intended to create security interests. 
This means that rate disclosure will be required for transactions with "nominal" purchase options, terms exceeding the useful life of the equipment or otherwise meeting the tests found in UCC sections 1-201(b)(35) and 1-203.
True leases, with purchase options for fair market value or fixed prices that are more than "nominal" amounts will not be subject to disclosure requirements. Presumably, TRAC leases will also be exempt as long as the purchase option price/TRAC amount is not nominal - this may impact so-called "zero TRAC leases."
Unfortunately, it looks as if this is the best ELFA and the lawyers involved can do. The bill is very likely to pass and be effective January 1.

400 Century Park South
Suite 100
Birmingham, AL 35226
(205) 251-8301

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P.O. Box 11386
Birmingham, AL 35202
Barry S. Marks   
Direct:  205.251.8303 │
Matthew D. Evans   
Direct:  205.251.8302  │

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