The U.S.-based financing company for Japan’s Honda Motors is reportedly set to end automobile leases in New York at the end of the month due to the State’s third-party liability laws.
NY law considers lessors as owners of the vehicles they lease, since they retain title throughout the lease term, which in turn makes them liable for injuries the cars they lease may cause.
A report from Reuters noted that Honda joins several other leasing companies, including Ford, in making plans to stop activity in NY. They claim that recent multi-million payouts against leasing companies have made it too expensive to continue operations.
Now that the NY legislature has adjourned it appears highly unlikely that the vicarious liability law will be changed by the end of the month.
The companies, however, are planning to revise their contracts, making them into “balloon loans,” which will have roughly the same payment terms as leases, but will transfer the ownership of the vehicle to the person acquiring it at the outset of the contract, rather than at the end.
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