Lemon law provides consumers in the United States an option to get compensation for a consumer product such as a car if it fails to meet the quality and performance standards. If someone ends up with a lemon vehicle, then a lemon law attorney can help them get a replacement vehicle (similar to the old one) and make the dealership pay for the repair costs.
While most car buyers tend to choose either a buyback or a replacement vehicle in a lemon law claim, many choose the cash and keep settlement lemon law instead. While the first two options (i.e. buyback and replacement vehicle) do provide a remedy when you purchase a lemon car, the latter is a good option if you wish to keep the vehicle and get some cash in your pocket.
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What is the Lemon Law?
The lemon law is a United States federal law that protects consumers who have purchased or leased a defective vehicle. It compels auto manufacturers and dealerships to replace the defective vehicle or give the consumer a refund or a lemon buyback.
The law provides three options for buyers whose vehicles have a substantial defect that could not be fixed after a reasonable number of repair attempts:
- Vehicle buyback
- Vehicle replacement
- Cash and keep settlement
The law covers cars, SUVs, pickup trucks, vans, etc. It applies to vehicles that are bought for personal or household use and some that are leased or bought primarily for business use.
New Vs. Used Car Lemon Law
Lemon law applies to all new cars that are sold under warranty. However, in most states, it only applies to new vehicles and does not cover used cars that are longer under the manufacturer’s warranty.
At the time of writing this (2020), only six states — Connecticut, Massachusetts, Minnesota, New York, New Mexico, and New Jersey have a lemon law for used cars on the books. Although, other states such as California have some sort of warranty to protect used car buyers.
State Lemon Law
Before you start looking to pursue a lemon law claim, either by yourself or with the help of a lemon law attorney, you should know which state your case will apply to. The lemon law is a federal law, but the particulars may be different in various states.
Depending on where you purchased your vehicle, your lemon law case may work differently. For example, if you bought your car in California but live in Texas, you would need to look for an attorney in California to help you.
In some states, the automobile manufacturer even pays for the attorney’s fees and other costs if you win the case. That way, you won’t even have to pay the fee out of your own pocket or from the settlement money.
When Does a Vehicle Qualify for Lemon Law?
Over time, people come across a variety of issues with their vehicles. Although, not every faulty car is qualified for the lemon law claim. A vehicle qualifies for state lemon law when:
- There are one or more substantial defects in the vehicle that were covered under warranty.
- The consumer encountered the defect within a certain period of time or after incurring a certain number of miles after buying the vehicle.
- The defect could not be fixed after a reasonable number of attempts to repair it.
The time period, mileage, and number of repair attempts vary from state to state. For example, the lemon law in California states that a vehicle is considered a lemon if an issue surfaced within the first 18 months of buying the vehicle or in the first 18,000 miles and there were four or more attempts were made to repair it. Unlike California lemon law, a vehicle is considered a lemon if the same issue resurfaces four times in a vehicle within the first 24 months or 24,000 miles.
How Cash and Keep Settlement Works
As the name indicates, cash and keep settlements involve a cash settlement. However, unlike replacement or buyback options, the consumer can keep their car and receive a sum of money in return for the issues they faced.
Here is how things work in a cash and keep settlement :
- The vehicle manufacturer usually accepts that the vehicle in question is indeed a lemon.
- The vehicle remains in possession of the consumer either via ownership or continued lease (until the lease contract expires).
- The vehicle manufacturer pays a certain sum to the consumer to compensate for all the trouble and hardship that the consumer faced because of the defective car. In some cases, the manufacturer pays cash compensation even if they believe that the car does not qualify as a lemon.
If you are okay with driving your vehicle even if it has defects that could not be repaired after a reasonable number of times, cash and keep is the option that you would want to pursue. When you settle your claim with cash and keep settlement, you receive cash compensation for the diminished value of your vehicle and keep the car.
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When is Cash Settlement a Good Option?
Cash and keep will also be your go-to option if the problems that your vehicle experience are not substantial enough to consider it a “lemon.” Oftentimes, the defect is not significant enough that the refund or lemon buyback and the replacement options apply to your situation. This is a great sigh of relief for those whose vehicles are experiencing problems but are not substantial enough to pursue as a claim.
Why Should You Take a Cash and Keep Settlement?
Cash and keep is not your only option if you have a defect in your vehicle. If the vehicle qualifies as a lemon, then consumers can also choose a buyback or a vehicle replacement option (we will discuss the alternatives further below).
Whether you should settle depends on many factors and there are pros and cons to every option. For example, it’s good to know that you can hold on to your vehicle and continue using it. Cars are often like boots. They take time to be broken into, and once they are, it’s a smooth sail. On the other hand, in a lemon law buyback option that also involves money, you usually get more compensation compared to cash and keep settlement.
Auto manufacturers usually prefer cash settlements over long legal cases. That way, the company does not have to use its time and resources on a long legal battle. If the car has sentimental value, or you simply prefer it, then cash and keep can be an excellent option.
Alternatives to Cash and Keep Settlement
If your vehicle has substantial problems, you can pursue the following two options besides cash and keep settlement buyback and a replacement vehicle.
Lemon Law Buyback
How the lemon law buyback works depends on whether you purchased or leased your vehicle, but both include almost identical items.
If you purchased your vehicle, then you will be able to get the following from your buyback:
- All monthly payments and down payments,
- Any associated charges including, sales tax, service contracts, finance charges, and prorated registration fees,
- Any costs that resulted from the defect in your vehicle, including rental car and tow expenses, and
- Your loan balance payment.
If you leased your vehicle, then you will be able to get the following from your buyback:
- All lease payments and down payments,
- Any associated charges, including sales tax, service contracts, finance charges, and prorated registration fees,
- Any costs that resulted from the defect in your vehicle, including rental car and tow expenses, and
- Your remaining lease obligations.
When you choose to receive a buyback, know that an average lemon law settlement in California should not take longer than thirty days.
Replacement Vehicle
Under the lemon law, the automobile manufacturer must offer a replacement vehicle that:
- Is considerably the same as your vehicle at the time of purchase
- Has the same service contract applied
- Includes any additional options that came with the vehicle
- Refunds you for any costs that resulted from the defect in your vehicle, including rental car and tow expenses
Contact an Attorney to Pursue Cash and Keep Settlement Lemon Law
Finding out that you have a car that keeps showing up with the same issues can be scary. Lemon law protection allows consumers to get the value of their money and purchase products without having to worry. If you believe that your vehicle has substantial problems, then an attorney can help you win your case. In most lemon law cases, the consumer can find a better alternative than driving a defective vehicle.
Contact our experienced California lemon law attorneys at Consumer Action Law Group for a free consultation. We will answer any questions you might have about your lemon claim and take the appropriate action to help you win.
Call our office at (818) 254-8413 for a free consultation today!