Total Lease Obligation

Total of all direct costs of a consumer lease, including monthly rentals, interest, and any contingent payments (Balloon Payments) due at the end of the lease, and fair market value (residual value) of the property at lease termination. Federal Reserve Regulation M requires disclosure of closing costs in consumer leases. The lessor must also tell the lessee whether the lease contains a purchase option available at the end. An Open-End Lease may require a balloon payment, depending on the value of the property, although the Consumer Leasing Act limits such payments to no more than three times the average monthly payment.