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How Dealers May Deal with Lemons

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Photo: André Karwath

Federal law says consumers have a right to know the condition of the vehicle they’re buying. This is why it is a crime to roll back the odometer, causing people to pay more for a car than it is worth based on the amount of wear and tear it has been subjected to. The law says consumers must know about major issues with the car such as whether the car has suffered flood damage or been in a serious wreck. The federal lemon law says consumers must get complete information about the terms and conditions of their vehicle warranty. But how many dealers deal with a reported lemon?

Refuse to repair the issue

If the problem isn’t considered to be serious, the dealer may refuse to repair it. They may say that loose mirrors, chipped paint, and other minor issues aren’t serious enough to force them to repair it at their expense. If the car was sold without a written warranty, the dealer may not have to repair it, either. In many places, only consumers with a written warranty are covered under lemon laws. If the vehicle was sold as-is and the issue was described to the consumer, the dealer could fight any demands to repair the problem. If you received a discount on the vehicle because of its condition, such as saving 10 percent on a car with obvious hail damage, the dealer doesn’t have to repair it.

When a warranty is given to the consumer, it may be full or limited. If the car has a limited warranty, issues that don’t fall under the limited warranty don’t have to be repaired at the dealer’s expense. If the car has a full warranty, then they typically do have to repair it.

Repair the vehicle

This is the most common solution for serious problems. The dealer typically values their reputation and tries to repair the issue. However, they may not do the repair as thoroughly as is needed. Little fixes may fail, forcing the customer to return again for another repair. This is why lemon laws vary in how many attempts or the time span the dealer has to repair it before they either have to replace the car or buy it back.

Buy it back

A car dealer has the option of buying back the vehicle. They can then junk it or repair it. However, how much they have to pay for the vehicle varies widely. They don’t have to just pay back the purchase price of the car. Factors like the cost of their repair attempts to date, how much you’ve paid for the car in payments, and how far the car has been driven all affect how much the buyback offer would be. You can get a good estimate of this amount using a lemon law buyback calculator.

Replace the vehicle

This is the least common approach for car dealers. First, they’re trading a good car for a lemon. Second, there is as much room to argue over whether the replacement car is a fair replacement for the original as there is the value of the buyback. Third, not all car dealers have enough redundancy in their inventory to give you a very similar car. A new car dealership may have three more of the same make, model, and age, but a used car dealer probably won’t. Fourth, buying it back is simpler and cleaner. There’s less hassle and lower liability.

This is a collaborative article.