What You Can Recover Under the Lemon Law

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Most state lemon laws provide for your vehicle to be replaced or repurchased (bought back) by the manufacturer if your meet the requirements for it to be deemed a lemon.  Whether you receive a refund or a replacement vehicle is up to you.  How we determine the amount to be refunded to the consumer varies from state to state.  For example, in some circumstances a check must be sent to the lienholder (made jointly payable to the consumer) for the full purchase price (which should include charges for any transportation fees, undercoating, dealer-installed options or accessories, dealer services, title fees, sales tax, extended warranties, etc.) plus all finance charges under your loan contract.  The bank would then deduct the payoff and refund the balance to you.  In settlement situations, the manufacturers usually just add up your down payment plus your payments made to date and issue a check to you, while sending a separate check to your lender for the loan payoff.  Either way, the refund amount should be about the same.  The lemon vehicle is returned to the manufacturer and you sign over the title.

Some state’s lemon laws require a mileage offset for your use of the vehicle.  If that is the case, the lemon law will contain a formula to determine the offset, which is usually based in part on the mileage at the time you first reported the lemon defect to the manufacturer.  Any offset would be deducted from your portion of the refund amount, but you should still receive the majority of your money back which can be used as the down payment on a new, more reliable vehicle.

In a replacement situation, you simply pick a comparable new vehicle and swap it for your lemon vehicle.  Usually it must be the same make and model as your lemon with similar features and options.  In some situations (for example, if you choose an upgraded vehicle), you could be required to pay the difference in price between your vehicle and the new one you choose.  If you have a loan which is secured by your car, most banks will do a substitution of collateral.  This means that your new vehicle is substituted for your lemon under the same loan.  You have credit for all the payments you have made already and you continue making the same payments as agreed under your loan contract.  Most lenders do not have a problem with this because the new vehicle should be more valuable than the lemon you are giving back to the manufacturer.

Not all vehicles will meet the state lemon law requirements, however.  Under the Federal Magnuson-Moss Warranty Act, a consumer is not entitled to a replacement vehicle or refund, as with the state lemon laws.  Under this federal law, you would be entitled to a cash payment for what is sometimes called “diminished value.”  Basically this means the difference in value between the price of your vehicle or consumer product and its actual value as a lemon.  To put it another way, how much less is the lemon vehicle or consumer product worth based upon the problems you have endured?  Obviously, this is a subjective determination because if you knew you were going to have the problems with the vehicle, you probably would not have purchased it.  Based upon our experience in settling thousands of these “breach of warranty” claims with the auto manufacturers and their attorneys, the amount paid to the consumer usually falls within a range of approximately 20% to one-third of the price of the vehicle, although sometimes that amount can be higher.  You receive the cash payment and keep the vehicle, although you don’t have to keep the vehicle once your case is concluded.  Many of our clients have used that money, along with the trade-in of their lemon vehicle, to purchase a new car, truck or motorcycle.  Or you can just keep the money as payment for the trouble you have endured with your lemon, the choice is yours.

Regardless of what sort of settlement or court award you receive, our lemon law clients never pay any attorneys’ fees unless and until we earn a recovery for you.  Our clients also pay nothing while their cases are ongoing.  In the highly unlikely event that you recover nothing, we do not earn a fee.  To find out how we can help you get rid of your lemon, call us at (888) 493-0770 and speak to one of our lemon law attorneys, or fill out our form for a free lemon case review.


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