How to Dodge the Traps of Car Leasing Companies & Leased Car Lemon Law Issues

Leasing a car has many benefits compared to purchasing. You get to drive the latest models, enjoy lower monthly payments, lower taxes, and most importantly, you avoid the potential headaches that come with buying a used vehicle.

However, the car leasing world is full of pitfalls to be wary of. If you are looking to lease a vehicle, you need to be aware of the problems you might run into, including leased car lemon law, warranty issues, price gouging, and more.

In this post, we want to discuss the common traps we’ve seen when leasing vehicles, how the leased car lemon law works, and how to avoid trouble from the start. Let’s dive into it.

Start by Reading the Fine Print of the Warranty

Nobody likes reading the fine print, we get it. This is what some leasing companies rely on to sneak tricky clauses into their leasing and warranty agreements. Be sure to check if the manufacturer warranty covers leased vehicles – as well as the information on the lemon law for leased cars.

Fortunately, most states require manufacturers to provide warranty coverage for leased vehicles. The only ones that don’t are:

  • Alabama
  • Alaska
  • Colorado
  • Nevada
  • New Mexico
  • South Dakota

It never hurts to have a lemon law lawyer read over the fine print. They may charge an hourly rate. But think of it as a pre-purchase inspection on a used vehicle.

Learn Your State’s Lemon Law

Lemon law exists across the United States – but each state has its own set of rules. Leasing a lemon is rare, but it never hurts to familiarize yourself with the rules of leased car lemon law.

Here is how leased car lemon law works in California.

  • The vehicle has one or more substantial defects that impair the safety, functionality, or value of the vehicle; and
  • The vehicle is covered by the manufacturer’s warranty; and
  • The defect was not caused by abuse or neglect by the driver.
  • The leasing company/manufacturer has made a reasonable number of unsuccessful repair attempts (usually at least two) on the defective vehicle; or
  • The vehicle has been out of service for 30 or more total days for repairs.

If your vehicle meets these qualifications, get in touch with a lemon law attorney to begin the claims process. Earning compensation under lemon law for leased cars is not always straightforward, you need an expert to navigate the process.

Focus on the Actual Price of the Car

When you go the leasing route, you work with a finance company that has purchased the vehicle, then leases it to you for a set timeframe in return for an agreed-upon monthly payment. These payments cover what the leasing company paid for the vehicle, the taxes, and finance charges.

The key to avoiding a bad deal is to negotiate the purchase price of the vehicle – as if you are buying it yourself. From here, you can apply that price to the leasing agreement. Your goal is to get the contract down to the smallest monthly payment and a low-interest rate.

The key here is confidence. The leasing salesperson you talk with can smell it from a mile away. Start by familiarizing yourself with terms like residual value, capitalized cost, cost reduction, etc. The last thing you want when negotiating is to get hit with jargon you don’t understand.

Research the Most Defective Car Models

To reiterate, buying or leasing a defective vehicle is pretty rare. However, some car models have more problems than others – and may result in problems with the lemon law for leased cars. Based on concerns filed with the National Highway Traffic Safety Administration, here are the top 10 models you’d be best to avoid:

  1. Chrysler 300
  2. Jeep Grand Cherokee
  3. Chrysler Town & Country
  4. Jeep Wrangler
  5. Toyota Prius
  6. Dodge Caravan/Grand Caravan
  7. Ford Edge
  8. Dodge Charger
  9. Ford Fusion
  10. Nissan Murano

Obviously, not all of these vehicles are defective. But it’s important to understand the risks before you lease a particular model.

Be Wary of the Timing on New Models

Timing on new car models is one of the biggest factors many lessees overlook. The common belief is that cars are most expensive to lease at the beginning of the model year – right when they hit showrooms. The truth is it’s actually one of the cheapest. This is because most leasing companies periodically increase prices throughout the year until the new model arrives.

Look into Gap Insurance

Gap insurance is for those unexpected problems you hope never happen – the car gets stolen, totaled, or you lose your job and can no longer afford the payments.

Whether you’re leasing from a small independent company or a large corporation, ALWAYS check for gap insurance. Most financing companies provide their own gap insurance within the contract. This is usually included in the monthly payment, but may also be a modest premium.

Get a Smart Estimation of the Miles You’ll Drive Annually

When it comes to leasing vehicles, the less you drive, the lower the depreciation of the lease and monthly payments. Most leases allow you to drive between 10 – 15K miles per year on a 36-month lease. If you go over, you may incur a $0.25/mile charge.

With this in mind, it’s best to create an estimate of the number of miles you typically drive in a year. This can help when you’re negotiating the contract – or at the very least, put your mind at ease.

Take Care of the Car

This should go without saying. Leasing contracts have a clause that you will keep the vehicle in good shape throughout the duration of the lease. Do yourself a favor and get the vehicle inspected by the leasing company 1 to 2 months before you need to return it.

If there is anything beyond normal wear and tear, get it fixed on your own. Leasing companies tend to charge a premium to fix things like dents and chips.

Wrap Up

Leasing a vehicle is an ideal solution for many people. But there are many things to be aware of before signing on the dotted line. No one wants to be ripped off on a leasing agreement – or deal with the process of lemon law for leased cars if they can avoid it.

Hopefully, this post has armed you with some key knowledge to save yourself some money and headaches when leasing a vehicle.

For any additional questions or concerns about how leased car lemon law works, don’t be shy about reaching out to a lemon law lawyer in California from Cline APC. We’re always happy to point you in the right direction. Call our office at 888-982-6915, send an email to, or schedule a FREE case evaluation.

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