(a) If a lessee’s application for a consumer lease is not approved on the terms submitted, the following rules apply:

(1) Except as otherwise provided in subdivision (2) of this subsection or in subsection (b) of this section, the lessor:

(A) Within one business day after disapproval of the application, shall tender back to the lessee any property traded in; and

(B) Promptly, but in no event more than five business days after disapproval of the application, shall refund any payment received other than an application fee.

(2) If the lessee has taken delivery of the goods before the disapproval of the lessee’s application, the lessor shall tender delivery of the property traded in and the refund under subparagraph (B) of subdivision (1) of this subsection when the lessee tenders back the goods that were delivered to the lessee.

(b) In the case of a consumer lease of a motor vehicle in which the vehicle is delivered to the lessee pending approval of the lessee’s application, the lessor, on or before delivery, shall give the lessee notice in a record of the rights and obligations provided in this section. If the application is not approved, the following rules apply:

(1) Except when the specified disclosure is made under subdivision (2) of this subsection, the lessor may not impose on the lessee any charge for the lessee’s use of the vehicle.

(2) The lessor may impose a mileage charge for the lessee’s use of the vehicle, at an amount not exceeding the mileage rate authorized for deduction under federal tax laws, but only if the fact and amount of that charge are disclosed to the lessee in a record separately signed by the lessee at the time of delivery. The lessor may offset the amount of the charge against any refund due the lessee.

(3) The limitations imposed by subdivisions (1) and (2) of this subsection do not affect a holder’s right to recover for damage to or loss of the vehicle while in the lessee’s possession attributable to the lessee’s tortious act or omission, or forfeiture or confiscation of the vehicle under governmental authority.

(c) A lessor may not sell or otherwise dispose of any property traded in until the lessee’s application is approved.

(d) If a lessor contracts to purchase property from a prospective lessee separately from a consumer lease, the lessor may not withhold payment pending, or otherwise condition payment upon, consummation of a consumer lease.