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Lesson 3:
Vehicle Repairs, Sales, & Leases

§3.14 Vehicle Leasing—Depreciation

A lease contract may place the risk of the vehicle’s depreciation on the lessee and may base the lessee’s liability on expiration of the lease on the vehicle’s estimated residual value. If the contract includes such a provision, the lessor must make a reasonable, good faith approximation of the anticipated actual fair market value of the vehicle on the lease’s expiration. There is a rebuttable presumption that the estimated residual value is unreasonable if the difference between it and the actual residual value is more than three times the average monthly payment, except on a showing of physical damage to the vehicle beyond reasonable wear and use, or of excessive use. [CC §2988(b).]

The lessor must act in a commercially reasonable manner when obtaining cash bids to determine the vehicle’s fair market value at the lease’s termination or expiration. [CC §2989.2(a).]


 
 
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