NEW YORK, Jan 22 (Reuters) - The lending arm of General Motors Corp. may stop leasing vehicles in New York if the state doesn't change a more than 75-year-old law that holds it responsible in traffic accidents, the Wall Street Journal reported on Wednesday.
GM and other big lenders are considering similar moves in other states and are already raising some fees in the wake of lawsuits, the article said.
In some states, General Motors Acceptance Corp. and other lending companies are being held accountable for accidents involving drivers to whom they have leased cars, the Journal said. Many of the statutes date back to the 1920s when vehicles were often chauffeured or owned by livery companies, and, in accidents, the drivers of the vehicles could not pay any damages. A few states have not amended their laws.
New York, Connecticut and Rhode Island are currently the top concerns for auto lenders because there is no limit on the amount for which the leasing company could be held liable, according to the report.
GM is raising its initial leasing fees in New York, Connecticut and Rhode Island by $405, effective March 1, the newspaper said. J.P. Morgan Chase & Co. is also boosting fees in New York and Connecticut by $405. It has exited the leasing business in Rhode Island altogether. Ford Motor Co. says it will end traditional leases in New York by midyear, replacing them with a balloon-payment financing option in which the customer owns the car but can turn it back in to the company when the final payment is due.
GM, Ford and Chase were not immediately available to comment early on Wednesday morning.