Lemon Law Basics

It is estimated that 1% of all new cars driven off the lot turn out to be lemons. That amounts to around 150,000 cars annually. When a car has unfixable problems, it is usually considered a "lemon," and there are laws in every state that protect consumers against these types of problems. If your car qualifies as a lemon, then you are entitled to a refund or a replacement vehicle.

In most states, lemon laws apply only to new vehicles purchased less than two years previously and driven less than 24,000 miles. Those numbers differ from state to state, but this is a reasonable estimate. In order to qualify as a lemon, a car must not have been abused, and inadequate parts must not have been installed (except by the dealership under which the warranty is written). The car must have an obvious and substantial defect that prevents its normal use, and it must be deemed unfixable after a specific number of repair attempts.

Depending on the state, different defects are used as guidelines for "significant problems". In some cases, a faulty paint job might qualify a car as a lemon, while in other instances the problem must be mechanical in nature.

There are three basic reasons why a car might be considered a lemon:

1. There is a serious safety defect with the car that could not be fixed after one repair attempt.

2. There is a non-safety related defect that could not be fixed after 3-4 repair attempts.

3. The car has been in the shop for the same repair for more than thirty days out of a year, which yielded no results.

Again these numbers vary by state, but the laws are fairly similar. In some cases, an extraneous problem will occur that does not fall under one of these guidelines, and the car will still be considered a lemon. Refer to your particular state laws for accurate definitions of a lemon.

If, under the requirements of your state, you find that your car qualifies as a lemon, you have a right to seek a refund for the vehicle or a replacement car, whichever is preferrable. First, you are required to contact the manufacturer of the vehicle and explain the defect. If necessary, offer to fax the reports you have been given by anyone who has provided maintenance for your car, as well as the dates on which you have had the car looked at by a certified mechanic. At that point, the manufacturer will either grant your refund or replacement, or will challenge the dispute.

Sometimes, a manufacturer will offer an unsatisfactory settlement for your lemon car. For example, they might offer to refund 75% of the purchase price, but not the full amount. If you wish, you can take the manufacturer to court, or in some states, you will be required to attend arbitration to settle the dispute. If the arbitrator finds that the car is a lemon, then you will be entitled to a full refund for the car.

Be careful when agreeing to arbitration, however, because manufacturers of lemon cars will try to get you to deal with their in-house arbitrator, whose opinion will inevitably lean toward the manufacturer. Instead, request that the arbitration be initiated by a state-appointed consumer advocate who will be more objective in his or her decision.

When suing in court for a lemon law violation or when attending arbitration, be sure to come prepared. Lack of proper documentation can result in a loss that might otherwise have been won. Bring the original advertisement for the car (with specifications); any service records that show when the car was examined by a certified mechanic; records of telephone or person-to-person conversations with the manufacturer (or dealer); written correspondence between yourself and the manufacturer (or the dealer); and and any phone records that show when you placed calls to the manufacturer.

Until arbitration or court proceedings have concluded, you will retain ownership of the vehicle and will be able to continue to drive it. Be careful, however, because any further damage that you do to the car will be used against you in legal proceedings, and if the defect includes a safety risk, you'd be better advised to obtain a rental car until it's all over.

Although most lemon laws do only apply to new cars, there are some states that will recognize used cars under the lemon law. Used cars that remain under the original warranty of the vehicle are most often elligible for lemon law disputes, and cars with fewer than 40,000 miles might also be considered.