Consumer complaint received 2024-08-01
Product: Vehicle loan or lease — Lease
Issue: Managing the loan or lease — Problem with fees charged
Company: ALLY FINANCIAL INC. (MI)

Ally is systemically improperly charging a disposition fee to customers who turn in appreciated vehicles on lease to dealers. Here are the facts and analysis of my case : Re : Lease Agreement 10 AF -671-MI-e 10/18 ( Lease ) Dear Sir or Madam : Ally is demanding payment of a Disposition Fee of {$390.00} plus sales tax pursuant to the above-referenced Lease ( copy attached ). As explained below, I have no obligation to pay the Disposition Fee because the vehicle was purchased from Ally under my purchase option.

I ask that Ally withdraw its claim and remove any adverse information that it has posted to my credit report in connection with the Lease. I assume that I am not the only Ally customer who has been improperly charged this disposition fee and I am presenting my claim to class action attorneys and also registering a complaint with CFPB. 
Background On XX/XX/XXXX, I entered the XXXX to with respect to a XXXX XXXX XXXX. The Lease states in pertinent part ( emphasis supplied ) : 3. Other Charges ( not part of your scheduled payment ) Disposition fee ( if you do not purchase the vehicle and we do not waive the fee under Section 13 ) : {$390.00} 31 Option to Buy the Vehicle. You have an option to buy the vehicle .... If this is a monthly payment lease, the price to buy the vehicle before the start of the last monthly period is ( 1 ) the price to buy the vehicle disclosed in Section 9, plus ( 2 ) the base monthly payment times the number of payments not yet due, minus ( 3 ) any unearned rent charge figured by the Actual Method ( see Section 41, based on the number of full monthly periods between early end and scheduled end. 
The only mechanism in the contract for the lessee to purchase the vehicle under Section 3 is the purchase option of Section 31. Therefore, the reasonable construction of Section 3 is that the lessee does not have to pay the Disposition Fee if it exercises its option under Section 31 to buy the vehicle.

After I entered into the Lease, the value of the XXXX increased above the option exercise price specified in the Lease, due to the vehicle shortage caused by the XXXX lockdowns. 
In XXXX, halfway through my lease, the XXXX XXXX dealership in XXXX, Michigan offered to exercise my option to purchase the vehicle, with the result that they would own the XXXX and I would be out from the lease without cost in their words. I agreed and to my knowledge and belief, the dealership purchased the vehicle from Ally, exercising my option under Section 31 of the LeasXXXX. 
At that time, the Lease was in full effect. There is no allegation that I had defaulted under the Lease. Neither Ally nor I had given any notice of termination to the other. In fact, Ally continued to deduct the monthly lease payment from my checking account after the transaction.

Approximately one month later, Ally refunded my final lease payment, which Ally had deducted from my checking account during the pendency of the dealerships purchase. 
XXXX years later, in XXXX, Ally began collections efforts to recover its so-called Disposition Fee under Section XXXX of the lease. 
Analysis Under Lease, I have no obligation to pay Disposition Fee if I purchase the vehicle by exercising the option of Section 31.

This is exactly what happened. I assigned my option under Section 31 to the Jeep dealership, which exercised my option to purchase the vehicle in my stead, thus ending my lease obligation to Ally with no obligation on my part to pay the Disposition Fee.

In its collection efforts, insists that its sale to the dealer was not pursuant to my purchase option but rather was some other type of wholesale disposition, as if the vehicle had come off the Lease and Ally had been burdened with the costs of disposition.

This is nonsense because this transaction was initiated during the term of the Lease not after its conclusion. Ally was certainly free to sell the vehicle during the Lease, but the Lease and my exclusive rights of possession would have remained intact. In other words, Ally could not undertake some wholesale disposition ( its words ) of the vehicle during my Lease and cart off the vehicle to the new owner while I was fully performing my payment allegations under the Lease.

The only mechanism in the Lease for Ally to sell the vehicle during the Lease and thereby terminate the Lease is the exercise by me of my purchase option. This is precisely what happened.

Ally may argue that the option right is personal to me and that I could not assign it to the dealership. Assuming that to be true, Ally could have declined to sell the vehicle to my assignee, the dealership. But Ally did not do this. Instead, it proceeded with the sale and thus waived any objection that it might have raised at the time. 
My characterization of the sale ( and the ultimate result that I have no obligation to pay the Disposition Fee ) is also consistent with the commercial intentions of the parties. The Disposition Fee compensates Ally for the time and trouble disposing of used and depreciated vehicles after they come off lease. When, instead, a lessee exercises the option to buy the vehicle during the lease, Ally has no disposition expenses and therefore does not ( as a matter of the terms of the Lease and its business practice ) charge the Disposition Fee. This is what happened in this matter except that instead of me exercising the purchase right, the dealership exercised it in my stead.

Conclusion For purposes of Section 3, the purchase of the vehicle by my dealership is a purchase by me, and accordingly I am not liable to Ally for payment of the Disposition Fee.

My ask is that Ally withdraw its claim for the Disposition Fee and retract any adverse information that it has posted to my credit history.