What Happens to a Car Loan in a Lemon Case?

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Like most 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 the California lemon law, your defective vehicle is considered a lemon if there is a recurring defect, or defects, which the manufacturer is unable to repair within a reasonable number of repair attempts. The law applies to defective vehicles that are still covered under the original manufacturer, or dealer, warranty.

More often than not – there are many loan payments left to be made when the defect is first detected and unsuccessful repair attempts are made.

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 important factor in whether or not you file a claim is when the defect is detected. 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 to make the loan payments on your vehicle throughout the lemon law process. The payments do not freeze as soon as you file the claim. I know it’s frustrating to pay hundreds of dollars every month for a defective vehicle – especially if a case gets dragged out.

The good news is the manufacturer is required to reimburse you for these payments if you win the case. 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 expert California lemon law lawyers on your side to review the fraudulent transaction.

What Happens with the Loan After the Case Closes?

Under California lemon law, the manufacturer is required to:

  • Provide a full 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 regards to the loan, the manufacturer is responsible to compensate you for the down payment and the total amount paid on the vehicle – minus a mileage offset. They are also responsible for paying off the remaining cost of the vehicle you have with the lender.

If the 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 compensating you for the defective vehicle – 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 compensation. 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 888-982-6915, send an email to info@clineapc.com, or fill out a free case evaluation.

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