It's every car buyer's nightmare: the lemon. Whether it's a fluke or a scam, getting stuck with a useless heap of scrap metal or a money pit of repairs doesn't have to be your fate. We’ll explain what a Lemon Law is, help you avoid purchasing one, and also outline your consumer rights and potential compensation options if you happen to land with a lemon.
Understanding Lemon Laws
What is a Lemon Law?
A Lemon Law is a regulation that attempts to protect a consumer if they purchase a defective vehicle known as a lemon. A lemon is the term for a car that has a significant malfunction or defect, making it unsafe to drive, despite repair attempts. This definition can vary from state to state. Examples of lemon cars are those with faulty engines, transmissions or brakes.
Why Do Lemon Laws Exist?
Lemon Laws exist to protect consumers purchasing in good faith. They are designed to help buyers find a clear path to seek a remedy - such as a replacement or refund - if the car they have purchased is not up to standard. They also assist consumers in case they have been victims of fraud when purchasing a car. Lemon Laws also provide a process for customers to seek remedies without having to go through the courts.
In addition, Lemon Laws put a level of pressure on manufacturers to maintain quality standards. They also encourage fair business practices so that car businesses do not exploit consumers by selling cars with known issues.
How Do You Know If Your Car Qualifies?
Common Criteria for Lemon Laws
If your car is struggling with issues pertaining to its brakes, engine, transmission, steering or suspension, you could have a lemon. However, Lemon Laws differ across states, so it's recommended to speak to an attorney in your state. Depending on your location, you may be required to make a number of repair attempts before the car can be deemed a lemon. Again, the number of repairs varies depending on your state. You may also have to factor in the number of days that your car is out of service. This can vary widely from between 15 to 30 days.
How State Lemon Laws Differ
Lemon Laws differ from state to state in the following ways:
- The number of repair attempts to qualify the car as a lemon
- Time periods
- Mileage limits
- Whether Lemon Law protection includes used and or leased cars
Federal Lemon Law vs. State Lemon Laws
Overview of the Magnuson-Moss Warranty Act
The Magnuson-Moss Warrant Act was passed by Congress in 1975 and is the federal law that governs consumer product warranties. It makes it easier for consumers to file a breach of warranty claims after purchasing lemons and allows them to recover legal fees and expenses when they win.
The Act also regulates warranties on consumer products that do not perform as well as expected once purchased, and also have an unreasonable repair history. While each state has its own Lemon Laws, the Magnuson-Moss Act is known as the federal Lemon Law and it is usually broader than state Lemon Laws.
Key Differences Between State and Federal Laws
State and federal Lemon Laws can differ in a number of ways:
- Scope: The Magnuson-Moss Warranty Act isn’t specific to cars, whereas many states have Lemon Laws covering only motor vehicles. State laws tend to specifically set out what defines a lemon car, whereas the federal Lemon Law doesn’t.
- Claims process: Under federal law consumers can sue for a refund or replacement if a warranty is breached. They can also recover legal fees if they win the case. This is often the same at state level but specifics may differ by state.
- Timeframes: The Magnuson-Moss Warranty act does not specify time limits or eligibility. State laws however often have more specific criteria on what qualifies a lemon, this often specifies a number of repair attempts or the number of days a car must be in the repair shop. State laws also usually define a timeframe within which a consumer must take action.
- State specifics: As a nationwide federal law, the Magnuson-Moss Warranty Act applies in every state. However, state laws define qualifications and processes.
- Enforcement: The federal law allows consumers to take action in both federal or state courts. State laws however often have provisions for mediation or arbitration as an alternative to going to court. Some states even require consumers to attempt to resolve issues through arbitration before filing a lawsuit.
Steps to Take if You Have a Lemon
Documenting Your Case
It’s important you keep all details about a car’s purchase and maintenance as this will be crucial evidence in building a case.
It’s important to document every repair, including date, the problem and any repairs made. You should also keep copies of all invoices and make a note if the same issue keeps happening repeatedly. You should also keep records of all of your communications, beyond emails, you should note down the dates and content of conversations you had in person and over the phone too. In addition, you should take photographs of any visible issues that can support your case too.
Many state-level Lemon Laws also require your car to be out of service for a certain number of days, so you should track this and make a note of your car’s “days out of service” too.
Contacting the Manufacturer or Dealer
It’s advisable to contact the manufacturer or dealer before taking legal action. It’s best to do this in writing so that you have a record, you should make it clear that your car is a lemon under your state’s Lemon Law and set out the steps you have already taken to resolve the issues.
In your communications with the manufacturer or dealer, you should be clear about the remedy you are seeking, whether that be repair, replacement or refund. You should also reference any relevant state laws here.
You should give the manufacturer or dealer a final opportunity to resolve the issue before taking legal action.
When to Seek Legal Help
If the dealer or manufacturer hasn’t resolved the issue, you may need to see legal advice. You should do this when the manufacturer or dealer refuses to fix the issue and you’ve hit the legal threshold for a lemon. It’s also advisable to speak to a lawyer if you are unsure about the law.
How to Avoid Buying a Lemon
Researching Vehicle History Reports
When purchasing a used car, it’s always advisable to check its Vehicle History Report (VHR). These reports contain crucial information about a car’s history including ownership history, accidents, and service records. This can alert you to any serious structural damage that may affect your car’s performance and its chances of being a lemon.
Importance of a Pre-Purchase Inspection
In addition, requesting a trusted mechanic to give the car a pre-purchase inspection could save you the trouble of buying a lemon. An independent third-party mechanic will be able to uncover hidden issues and give you an honest opinion about the car’s condition.
Checking Reviews and Recalls
Before buying a car, you should check review websites like Consumer Reports, Edmunds and Kelley Blue Book to see if any owners have experienced any common problems. You should also research to see whether there have been any manufacturer recalls as this may suggest a safety defect or non-compliance with safety standards. Recalls should be stated on the manufacturer’s website and you can also check these through the National Traffic Safety Administration (NHTSA).
What Are Your Rights and Compensation Options?
Possible Refunds and Replacements
If your car qualifies as a lemon you will have the right to a refund or a replacement car under most Lemon Laws. If you opt for a refund, in most states you will be refunded the purchase price minus a deduction - known as mileage offset or usage fee - for the car’s usage. This deduction accounts for the time that you drove the car before you discovered that it was a lemon.
Alternatively, you may choose a replacement. This will usually be a car of a similar model, make and value. Whichever you choose, the manufacturer or dealer will be responsible for the costs involved with returning the car. That said, specifics differ across states.
Arbitration vs. Legal Action
Arbitration is a form of dispute resolution where an arbitrator - a neutral third party - reviews your case and makes a decision. Many dealers and manufacturers offer this route to avoid going to court. Arbitration is usually faster and quicker than the cost of a court case, it is also more convenient as you may not require legal representation. Importantly, once the arbitrator has made their decision, it is legally binding. That said, some manufacturers may require you to go through their own arbitration programs, which may have biases.
If you prefer a more formal process or arbitration hasn’t resolved the issue, you may pursue legal action in court. Court cases give you full legal rights to pursue damages and compensation. You can also appeal the court’s decision through a higher court. That said, formal legal action can be time-consuming and expensive.