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The Lemon Law Process
The Lemon Law Process
If your vehicle or other consumer good fails to meet the manufacturer’s warranty after a reasonable number of repair attempts, then it is a “lemon” and you are entitled to a refund or a replacement vehicle or other consumer good. If your vehicle is not determined to be a lemon, you may be entitled to receive cash compensation under the lemon laws for the diminished value of your vehicle or other consumer good.
In California, the lemon laws apply to new or used, purchased or leased vehicles that are sold with a written warranty.
Refund / Lemon Buyback
If you purchased your vehicle and it is a “lemon,” your refund will consist of the following:
Monthly payments and down payment;
Collateral charges, which include sales tax, finance charges, and prorated registration and service contracts;
Incidental and consequential expenses that are related to the lemon, which include rental car or tow expenses; and
Collateral charges, which include sales tax, finance charges, and prorated registration and service contracts;
Collateral charges, which include sales tax, finance charges, and prorated registration and service contracts;
Payment of your loan balance.
* If you are not the original owner of the vehicle, your refund will be based on your purchase price, not the original owner’s purchase price.
If you leased your vehicle and it is a “lemon,” your refund will consist of the following:
Lease payments and down payment;
Collateral charges, which include sales tax, finance charges, and prorated registration and service contracts;
Incidental and consequential expenses that are related to the lemon, which include rental car or tow expenses; and
Payment of any remaining lease obligations.
Replacement Vehicle
If your vehicle is a “lemon” and you get a replacement vehicle, whether it was purchased or leased, the replacement vehicle must:
Be substantially identical to your vehicle as it existed at the time you purchased or leased it;
Include the same service contract, if applicable;
Include any undercoating, rustproofing or other factory/dealer options that came with the original vehicle; and
Reimburse you any incidental and consequential expenses that are related to the lemon, which include rental car or tow expenses.
* The manufacturer is responsible for any sales tax, license and registration fees for the replacement vehicle. The balance of your finance or lease term will remain with the replacement vehicle. Before receiving the replacement, it is advised that you contact your lender to learn how they will deal with your existing loan or lease as you may need to make a new loan with different terms. You will be responsible for any difference in price between the original and replacement vehicle.
Mileage Offset Formula
If your vehicle is a “lemon” and you get a refund or replacement, the manufacturer is entitled to deduct an offset for the time that you drove your vehicle ‘trouble-free.’ The mileage offset is calculated by multiplying the purchase price by the mileage at the first warranty repair attempt for the problem that rendered it a lemon, and dividing this amount by 120,000 (which in California, is the average life expectancy of a vehicle).
Following is an example to illustrate the mileage offset formula:
Price paid by consumer for the vehicle………………………………..$20,000
Miles driven by consumer at first repair attempt………………………9,000
($20,000 x 9,000) / 120,000 = $1,500
Cash Compensation
If the problems with your vehicle do not rise to the level of it being considered a “lemon,” you may be entitled to receive cash compensation for its diminished value as a result of its problems. Many times the problems with a vehicle may not rise to the level of a “substantial impairment.” In these situations, the manufacturer will often pay the consumer a “cash and keep” settlement. This is where you will keep your vehicle and receive a sum of money for the problems you experienced with it. Also, the remaining portion of the warranty will remain in effect.
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If the problems with your vehicle do not rise to the level of it being considered a “lemon,” you may be entitled to receive cash compensation for its diminished value as a result of its problems. Many times the problems with a vehicle may not rise to the level of a “substantial impairment.” In these situations, the manufacturer will often pay the consumer a “cash and keep” settlement. This is where you will keep your vehicle and receive a sum of money for the problems you experienced with it. Also, the remaining portion of the warranty will remain in effect.
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