Leasing or Rent to Own

For many people, renting or leasing goods is a way to have things they can’t afford to buy outright. But the real price of convenience can sometimes be steep. The Consumer Protection Act, 2002 covers:

fixed-term leases of four months or more;
leases for an indefinite term or that are automatically renewed until one of the parties terminates the lease;
residual obligation leases.

Your Rights

Under the Consumer Protection Act, 2002, businesses that lease goods to consumers must disclose key details of the lease in advertisements that deal with the cost of a lease and in other documents when entering into contracts. These include annual percentage rates so that consumers can compare a long-term lease and a loan.

Types of Leases

In a closed-ended lease, the consumer makes payments for an agreed-upon length of time and then returns the good. The consumer may be contractually responsible for unreasonable wear and tear on the returned good.
For an open-ended lease, the consumer may also be contractually responsible for additional charges depending on the value of the good at lease end.

Leases may also have purchase options, where the consumer can buy the leased item.

Under The Consumer Protection Act, 2002 rules, in the case of an open-ended lease, the maximum additional lease-end charge is limited to no more than three average monthly lease payments.

The act also protects consumers against the size of the additional charges under an open-ended lease by regulating such "residual obligation" leases. The maximum lease-end liability in a residual obligation lease is limited by a formula in the Consumer Protection Act, 2002 regulations and can, in no event, be more than the value of three average monthly lease payments.