Legally reviewed by: Jessica Anvar Stotz, JD, MBA
Short answer: If you win a lemon law case in California, the auto manufacturer may offer one of two options under the California Lemon Law, i.e., a replacement or refund.
The first possibility is that your defective vehicle will be replaced by the manufacturer for one that is substantially similar to the lemon vehicle. The second possibility is a repurchase of the subject vehicle where the manufacturer provides a statutory refund for the lemon vehicle.
The California Lemon Law provides consumers with rights in the event they purchase or lease a defective vehicle. The process typically begins when the consumer finds themselves presenting their vehicle for repeat warranty repair attempts. This may be the result of some kind of substantial defect with the vehicle.
A substantial defect is one that impairs the value, safety, or use of a vehicle. After the defect is discovered, a consumer should present the vehicle to an authorized manufacturer dealership to have it repaired. Repeat warranty repairs are the basis for filing a Lemon Law claim, so taking the vehicle to be repaired and documenting those repairs is crucial.
Understanding Your Options After Winning a California Lemon Law Case
There are generally two possibilities for consumers who have won a California lemon law case. The first is that your defective vehicle will be replaced by a vehicle of a similar make and model. This is called a vehicle replacement. This option aims to replace the lemon vehicle with a comparable new car from the same manufacturer.
Your current loan amount, or term of your lease, will stay the same in duration as the original loan or lease. However, a “usage fee” will be taken for the time you were able to enjoy the vehicle without problems, which is based on the mileage at the first repair attempt for which the vehicle is being deemed a lemon. Also, the consumer will be responsible for any difference in price between the lemon vehicle and replacement vehicle.
The second possibility is a lemon law buyback, also known as a repurchase or refund. In this case, the manufacturer of your vehicle repurchases it because it is a lemon.
The consumer is reimbursed all of their expenses towards the purchase or lease of the problem vehicle, including the down payment, all monthly payments, and a pro-rated portion of the registration. The usage fee based on mileage is deducted from the refund. The balance of the loan or lease on the vehicle will also be paid off.
With both the replacement and the repurchase, consumers are also entitled to the reimbursement of any and all incidental or consequential expenses related to the lemon vehicle such as rental car or tow car expenses related to the lemon vehicle.
Finally, with both scenarios, the defendant manufacturer is responsible to pay for the consumer’s attorneys fees and costs. This makes pursuing a California Lemon Law an easy financial decision as the consumer will not incur any attorneys fees as a result of the representation.
Replacement Vehicle: What to Expect
If a lemon law case resolves through replacement, you can expect to receive a new vehicle of similar value, make, and features as the defective one. Most commonly, this will be a vehicle of the current year, but this is subject to availability from the manufacturer. With this option, the consumer is responsible to pay for the usage fee, if any, and the difference in price between the lemon vehicle and replacement vehicle.
Lemon Law Refund: What to Expect
If a lemon law case resolves through a lemon law refund, there are a handful of different expenses that are refunded, which include:
- Sales Tax and Registration Fees: You will be reimbursed for the sales tax and current registration fees on the defective vehicle.
- Finance Charges and Interest: You will be reimbursed for the finance charges and interest on your loan or lease. This means that the total amount of interest and loan charges you paid over the life of the loan will be repaid to you.
- Incidental and/or Consequential Expenses: You may be entitled to reimbursement for any incidental expenses incurred as a result of the lemon vehicle, including related out-of-pocket repair costs, rental car expenses, tow car expenses and the like. These expenses will likely have to be proved up so it is crucial to document and save copies of all receipts related to these types of expenses.
The Mileage Deduction: Understanding the Offset
The usage fee offsets how much a consumer will be reimbursed after bringing a successful claim. This offset is typically based on a formula involving the mileage of the vehicle at the time of repair divided by a set number. In California, this formula is equal to the purchase price multiplied by the mileage at the first repair attempt for which the vehicle is deemed a lemon divided by 120,000, which is the average lifespan of a vehicle.
For example, if a defective vehicle was purchased for $60,000 and had 5,000 miles at the time of its first repair, the usage fee would be (60,000) x (5,000) / 120,000, or $2,500. That usage fee would then be deducted from the payments made on the vehicle. In this case, if the consumer had made $45,000 of payments, the usage fee would subtract $2,500 and the final reimbursement would be $42,250.
Taking Possession of Your Remedy
In California, vehicle manufacturers are not always required to provide a replacement vehicle to a consumer after a successful claim. Consumers can always request a replacement vehicle from the manufacturer, but the manufacturer has the right to refuse such a request and offer solely a refund.
If a replacement vehicle is the remedy a consumer receives, the manufacturer pays for the sales tax, license fee, and registration fee. However, the consumer is responsible for any difference in price and the mileage offset. The amount and duration of your loan or lease will stay the same across the lemon vehicle and its replacement.
Alternatively, you may receive a lemon law refund, which consists of the reimbursement of the payments you have made on the vehicle, plus a handful of other reimbursable expenses, from the manufacturer.
These include the down payment, monthly payments, sales taxes, current registration fees, finance charges (interest), related repair costs, and rental car expenses in some cases. The remaining balance on the vehicle’s loan or lease will also be paid off. As before, the usage fee applies, but here is deducted from your refund.
Additional Considerations
Dealing with a defective vehicle can be very frustrating, especially for a consumer who has just spent a significant amount of money on something they likely use every day and rely on.
Resolving a lemon law claim and receiving the remedy you deserve helps manage this stress and provides consumers with what they should have received from the start. Never hesitate to get in touch with an experienced lemon law attorney if, at any time during the process, you feel that you could benefit from legal guidance. They can provide you with the best representation possible.
Connect With an Attorney
If you believe you may have a lemon law claim, contact a skilled California lemon law attorney today. These claims can be time-sensitive and complex to navigate, and having a strong advocate in your corner makes the entire process more straightforward and less stressful.
The attorneys at the Lemon Law Experts have years of experience handling lemon law cases and can help you understand your rights throughout the claim process. Since 2009, their team of Lemon Law Experts have successfully helped thousands of consumers across the State of California with successful lemon law claims recovering millions in refunds and cash compensation.
We work closely with clients to evaluate their case, organize and collect documentation, and negotiate with the manufacturer. Contact us today via a phone call at (877) 885-5366 or online for a free consultation.
