Buy-backs are generally the most common outcome when a consumer wins a lemon law case.
A lemon law buy-back occurs when an automaker reacquires a vehicle due to one or more specified warranty-covered defects. The consumer is reimbursed for 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 get the best deal possible – even in defeat.
From a consumer’s perspective, you probably have very little (if any) experience dealing with the lemon law process. The manufacturers commonly take advantage of this by inserting all kinds of fancy-worded stipulations throughout the buy-back process. Many of which go against consumers’ best interests.
Here are four major points of manufacturer trickery to look out for in the process of getting a lemon law buy-back.
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 your lemon law 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?
Under California lemon law, a buy-back means that the manufacturer is required to provide a refund to the consumer, which involves 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 does allow the manufacturer to deduct an amount of this payment to cover the use that the buyer was able to get out of the vehicle – before it was deemed a lemon. This amount is the mileage offset.
Lemon law has 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 for the lemon problem), 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 law attorney, the manufacturer will often times 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 case turns out. Commonly, if you contact the manufacturer in regards to filing a lemon claim, they will 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 that the arbitrators are hand-picked by the manufacturer. 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 the past, the rate of loss for the consumer has been as high as 70%. This should not be the case when filing a lemon law claim.
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. Regardless of what the manufacturer tells you about arbitration, don’t, under any circumstance, take them up on their offer.
I go into more detail about lemon law arbitration and why you should NEVER do it in this post.
4. Unlawful Release Forms
This doesn’t happen often, but is 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 your outcome of the case.
Always remember, if a manufacturer tries to get you to sign any kind of release form for a lemon buy-back in California, they are not representing the law. Do not fall for it!
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 justice you deserve – even if your case is a slam dunk.
Having a skilled lemon law attorney in your corner is crucial to avoiding these little tricks of the trade. If you have any questions regarding lemon law or the buy-back process, please reach out to us as soon as you can!