What Happens to a Car Loan in A Lemon Case?

Like many car buyers, you may have purchased your vehicle via financing. California lemon law lawyers get asked about car loans with just about every lemon law case they handle. We want to clear this up today. 

Under California lemon law, a vehicle is considered a lemon if it has a recurring defect(s) that the manufacturer cannot repair with a reasonable number of attempts. Your defective vehicle must also be covered under the original manufacturer or dealer warranty to qualify.

If your faulty vehicle qualifies under these lemon law criteria, you may be entitled to a California lemon law buyback. A lemon law buyback is when the manufacturer buys your defective car back from you and covers all reasonable fees.

However, the lemon law process does not automatically cancel or forgive your car loan. Often, many loan payments are left to be made when the defect is first detected. Even after unsuccessful repair attempts have been made.

So, how do you get out of a lemon car loan? In this post, I want to discuss how financing factors into a lemon law case – and how you can recoup your losses.

Without further ado, let’s dive in.

Can You Pursue a Lemon Claim in a Loan?

Until you make the last payment on your car loan, the lender is still on the title.

So are you even authorized to file a lemon law claim? Absolutely, you are!

It doesn’t matter if you took out a loan, lease, or paid upfront with cash; you can file a claim to pursue justice as soon as your vehicle meets the criteria of California lemon law.

The most critical factor in filing a claim is when the defect was detected and reported to the manufacturer. As long as you notified the manufacturer or dealer while the vehicle was still under warranty, your claim is valid – even if subsequent repair attempts are made after the warranty expires.

If you even have a slight hunch your faulty vehicle is a lemon, start talking with California lemon law lawyers immediately! The worst thing you can do is wait.

Who is Responsible for the Loan Payments?

Unfortunately, you are still responsible for making the loan payments on your vehicle throughout the lemon law process. The payments do not freeze when you file the claim. We know paying hundreds of dollars monthly for a defective vehicle is frustrating, especially if a case gets dragged out.

The good news is the manufacturer may be required to provide you a lemon law buyback if your vehicle has been deemed a lemon. The manufacturer must cover all reasonable costs associated with the lemon law process – including your car payments.

Until then, just keep making the payments on time – it’s not worth getting in trouble with the bank and sacrificing your credit score. Worst case scenario, your vehicle gets repossessed for failure to make the payments.

In some rare instances, there are certain types of auto fraud and breach of warranty claims committed by the manufacturer or dealership. If properly asserted, the courts may permit you to stop making payments on the vehicle while the lawsuit is still pending.

This doesn’t happen very often, and you’ll certainly need to have an expert California lemon law lawyer on your side to review the fraudulent transaction.

How to Get Out of a Lemon Car Loan

Under California lemon law, the manufacturer is required to:

  • Provide a full lemon law buyback (refund) or replacement of the defective vehicle.
  • Reimburse you for any incidental costs related to the lemon (towing fees, cab fares, hotel stays, lost wages, etc.
  • Cover ALL attorney and court costs.

In regard to how to get out of a lemon car loan, the manufacturer is responsible for compensating you the total amount paid on the vehicle. (Minus a mileage offset). They are also responsible for paying off the remaining balance of the car you have with the lender.

If the lemon law buyback amount is lower than the amount you still owe on the vehicle, the manufacturer may try to force you to cover the difference. This practice may be illegal–please contact a lemon law lawyer first.

What’s the Next Step?

Finding out you have a lemon is never a pleasant surprise – regardless of whether you financed it or paid for it upfront. The most important thing to keep in mind is you are not alone.

The manufacturer will do just about everything to get out of a California lemon law buyback. This is to preserve both their pocketbook AND global reputation.

The best thing you can do is seek out a professional lemon law attorney to manage your claim and fight for full California lemon law buyback. At Cline APC, our experienced California lemon law lawyers have fought cases with just about every automaker.

We make it a point to educate clients on the basics of lemon law, how their situation factors in, and the path to earning justice. Our goal is to resolve your case as fast as possible.

If you have any questions regarding your defective vehicle, your loan, buybacks, or anything else about the California lemon law process, get in touch with us today.

Call our office at 888-707-3612, send an email to info@clineapc.com, or fill out a free case evaluation.

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