A lemon law buyback is one of the possible outcomes you may encounter if you buy a car that's considered a lemon – one with significant, unresolvable issues. It might be seen as the most successful outcome of a lemon law case, where the manufacturer reimburses you for all vehicle costs. Let's take a closer look.
Lemon Law Buyback
Lemon laws exist in some form in all 50 states in the U.S., but they can vary widely, making the outcome of these cases vary as well. Perhaps the most desired outcome of a lemon law case is a buyback. In this case, an automaker buys back the car that was deemed a lemon, giving you a full reimbursement.
Lemon law buybacks typically return the following costs to you:
- Your down payment
- All monthly payments made
- Finance charges
- Pro-rated registration fees
- Service contract costs
- Rental and towing expenses
- Complete loan pay off
If you purchased a vehicle that turned sour on you, getting all the costs associated with your car back can go a long way toward getting you into a new, working vehicle. However, because states vary, you may not qualify for a full buyback.
There are other options that a manufacturer can opt for, and they may not have the best outcome for you as a consumer.
Other Lemon Law Case Outcomes
If you don't get a buyback from your lemon law case, it's possible to be given a replacement car. It must be "substantially identical" to the lemon car and its condition at the time you purchased it (without its lemon flaws). This means you won't be receiving a Mustang to replace your Focus - sorry!
In some cases, you may get a buyback for a partial cost – the purchase price of your lemon, minus the value of the car in the time you drove it before it had problems. This is called a mileage offset, where the manufacturer is entitled to deduct an amount from your reimbursement for the time you drove the car problem-free.
To calculate a mileage offset that might affect your buyback, multiply the purchase price of the car by the mileage at the time of the first warranty repair for the issue that caused the lemon designation. Then divide this amount by 120,000.
For example: If you purchase a vehicle that costs $25,000, and took it in for a warranty issue at 5,000 miles, the mileage offset for your car is $1,041.67. This means you're getting $23,958.33 back from the automaker ((25,000 x 500)/120,000 = 1,041.67).
In rare cases, some automakers attempt to reimburse you only for the equity in the vehicle. This means you could still end up owing loan payments for the amount of the loan which exceeds the value of the car (negative equity). The worst part about this is that even though you still owe your lender, the manufacturer gets the car, which leaves you paying for something you don't have.
Lastly, some manufacturers may attempt to take you through arbitration, where they tell you they want to settle out of court, often saying it's quicker. You should avoid this at all costs. Automakers usually have many more resources to use in this kind of situation than an individual, which can put you at a disadvantage.
What Happens After Buyback?
Once a lemon is bought back by the manufacturer the car is typically issued a branded title declaring it to be a lemon or salvage vehicle. A few states are more specific and brand these vehicles as Manufacturer Repurchase. In order for lemon title cars to be driven legally, they must get repaired completely and undergo inspection to deem them suitable. It's important to know all the designations for lemon in your area so that you can avoid these in the future when buying a used vehicle.
What's Considered a Lemon?
To be considered a lemon, a car must have a substantial defect that affects the operation, safety, or value of the vehicle, which occurs within a certain amount of time or number of miles from purchase. The defect must be covered by a warranty, and remain unfixed after a reasonable number of attempts. The number of attempts that are considered reasonable varies by state, but typically it depends on the issue.
Generally, lemons must meet these repair attempt qualifications:
- Serious safety issues: One attempt
- Non-serious issues: Three or four attempts
- The vehicle has spent 30-days or more in the shop within one year
Additionally, for a car to qualify as a lemon, issues typically must occur for the first time within one or two years, and/or 12,000 to 24,000 miles. These standards vary by manufacturer and state. Lemons are typically new cars, but in some cases, used cars qualify as well.
Need Another Vehicle?
If you need another vehicle after going through the headache of a lemon, we want to help. At Auto Credit Express, we know how tough it can be to get back on the road after a bad experience. We want to relieve your stress by doing the searching for you.
Let us connect you to a local special finance dealership that's signed up with lenders to help in many types of credit situations. It's fast, free, and there's never any obligation to buy. Just fill out our online auto loan request form to get started!