4 Major Issues to Avoid with Lemon Buybacks

A buyback – or refund – is generally the most common outcome when a consumer wins a lemon law case. Lemon buybacks occur when an automaker re-acquires a vehicle due to one or more specified warranty-covered defects. The manufacturer’s buyback value includes all costs related to the vehicle minus a mileage offset.

Now, even if the odds are extremely in your favor going into the case, you need to keep in mind that auto manufacturers have very powerful legal teams working to avoid paying out your lemon law buyback – even in defeat.

From a consumer’s perspective, you probably have very little (if any) experience dealing with the lemon law process. Manufacturers commonly take advantage of this by inserting all kinds of fancy-worded stipulations throughout the process. Many of which go against consumers’ best interests.

So, how does a lemon law buyback work?

And how can you ensure you get every dollar you are owed by the manufacturer?

Here are four major points of manufacturer trickery to look out for in the process of getting fair lemon buybacks.

1. Negative Equity

Negative equity on a lemon occurs when you end up owing more money to the bank than the car is worth. This can, unfortunately, happen when you trade in a vehicle that you still owe money on for a new vehicle that turns out to be a lemon.

If this happens to you, it’s very common that the manufacturer will take the position of not paying you back any of the negative equity from the previous vehicle.

Say you have a car that you still owe $2,000 on. You trade that one in and purchase a new car for $15,000 – of which turns out to be a lemon. While you may get a full refund for the $15,000, you might get stuck with that $2,000 of negative equity owed on the old car. So, you now owe a bunch of money on a vehicle that you no longer have.

Also commonly referred to as an “upside-down car loan,” this is something you need to be very conscious of when you consult a lemon buyback attorney.

2. Aggressive Mileage Offsets

As lemon law lawyers in Los Angeles, we see a lot of manufacturer negligence and intentional fraud with mileage offsets. We take a number of precautions to ensure clients don’t get the short end of the stick.

First of all, what exactly is the mileage offset?

California lemon law buybacks require the manufacturer to provide a refund to the consumer, which includes the down payment, monthly payments, taxes, registration, and all official costs associated with the vehicle, as well as all the incidental costs that stemmed from the lemon.

Now, in addition to all of this, the law allows the manufacturer to deduct an amount of this payment to cover the use of the vehicle – before it was deemed a lemon. This amount is the mileage offset.

Lemon buybacks in California have a defined formula for this.

It is the number of miles driven by the buyer (from the date of purchase up to the first repair visit), divided by 120,000. This is the number of miles the State of California originally decided was the average lifespan of a vehicle. This number is then multiplied by the total amount actually paid by the consumer.

For example, let’s say you bought a vehicle for $12,000 and drove it for 5,400 miles before its first repair. Here is what your mileage offset would be:

5,400/120,000 = 0.045

0.045 x $12,000 = $540

When consumers aren’t represented by a specialized lemon buyback lawyer, the manufacturer will oftentimes present an unfair number for the mileage offset. Then, they give the impression that the consumer has no right to contest the number, regardless of how aggressive it seems.

Keep the mileage offset formula in mind and don’t fall victim to this!

3. Manufacturer Arbitration

Arbitration is something you need to be VERY careful to avoid. It can be the difference-maker in how your lemon law buyback turns out. 

If you contact the manufacturer in regards to a buyback lemon title, they may encourage you to take arbitration as a “cheaper and faster way” to settle the dispute out of court.

What they don’t tell you is they hand-pick these arbitrators. 

These “independent arbitration firms” are rarely objective in their practices. If you go with this option, it’s very likely they will rule against you, which can result in you losing your claim. In our experience, the past rate of loss for the consumer has been as high as 70%. This should not be the case when filing for lemon buybacks.

In another scenario you might go before an arbitrator the manufacturer identifies in its warranty documents. These arbitrators are not on your side. In other words, they have no motivation to help you. You typically cannot be represented by an attorney, but the manufacturer’s can bring their representatives trained in defeating lemon law claims. This is why you should always handle your case with a lemon law attorney in your corner.

It should be noted; you can still take the manufacturer to court if they rule against you in arbitration. However, the arbitrator’s decision can (and will) be used against you as evidence in your civil case. Regardless of what the manufacturer tells you about arbitration, don’t, under any circumstance, take them up on their offer. There is a reason the manufacturer wants to avoid the courts and force you to arbitration.

I go into more detail about lemon law arbitration and why you should NEVER do it in this post.

4. Unlawful Release Forms

This is common practice with lemon buybacks and it’s definitely something you need to be aware of.

In the state of California, there is absolutely no requirement for consumers to sign a release form or any other sort of settlement agreement from the manufacturer. In the name of duping consumers who are inexperienced with lemon law (and aren’t represented by a specialized lawyer), manufacturers might try to slip in fine print that compromises the outcome of the case.

Always remember, if a manufacturer tries to get you to sign any kind of release form for a California lemon law buyback, they are not representing the law. Do not fall for it!

In Closing

Winning a lemon law case and being entitled to a buy-back is a great feeling of victory. However, it’s important to know that this ruling only means you won most of the battle. Automakers and their seasoned legal teams have all sorts of tricks up their sleeves to get out of giving you the full compensation you deserve – even if your case is a slam dunk.

Having a skilled lemon law attorney on your side is crucial to avoiding these little tricks of the trade. If you have any questions regarding lemon law or California lemon law buybacks, please reach out to us as soon as you can!

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