How the New Car Lemon Law Can Help You

You've purchased a new car, but something isn't right. Whether it's the steering, the brakes, a botched paint job, or a horrible smell, you think you've bought a lemon. But just because you personally believe the car to be a lemon doesn't mean the law necessarily agrees with you. Each state has enacted its own set of "lemon laws" to deal with the problem of irretrievably malfunctioning new cars. Some states also protect the purchase of used cars - see below., The following is a general framework for determining whether your car qualifies as a "lemon," and therefore whether you are afforded protection under consumer protection laws.

While you can handle the problem yourself using the guidelines below, if you find the process too difficult or the manufacturer is acting inappropriately, you can contact an attorney with experience dealing with lemons and manufacturers, who will fight for your rights.

What Qualifies as a Lemon?

Under the law of most states, for a vehicle to be considered a lemon, the car must 1) have a "substantial defect," covered by warranty, that occurs within a certain time after purchase, and 2) continue to have the defect after a "reasonable number" of repair attempts. What exactly constitutes a substantial defect or a reasonable number of attempts varies by state, so it is incumbent upon you to determine the law in your state.

Substantial Defect

A substantial defect is a problem—not caused by the owner's use of the car after purchase—that impairs the car's use, value or safety. In most states, the defect must be covered under express warranty and affect a serious function or expectation of the car. For example, faulty steering or brakes qualify as a substantial defect because they affect vehicle safety, while a loose glove compartment hinge does not qualify because it is a minor problem that doesn't affect a significant function or expectation of the car.

But what about the wide range of problems that fall somewhere between faulty brakes and loose hinges or radio knobs? The legal line drawn between "substantial" and minor problems isn't always clear and varies from state to state. Problems like a poor paint job may not seem like a substantial problem to some people, but many states have found these conditions to constitute a substantial defect.

No matter what state in which you reside, the defect must occur within a certain time period or certain number of miles.

Reasonable Number of Repairs

If your car has a substantial defect as outlined above, the dealer and/or manufacturer is then given a reasonable number of attempts to repair the problem before the car can be declared a lemon.

Generally, four repair attempts is considered reasonable, although this number may be as low as one attempt if the problem is a serious safety defect. Most states also have provisions which state that if a vehicle is in the repair shop for a certain number of days per year to fix substantial defects, the car may be deemed a lemon.

Federal Consumer Protection

The Magnuson-Moss Warranty Act is a federal law that protects the buyer of any product that costs more than $25 and comes with a written warranty. The Act is designed to prevent manufacturers from creating grossly unfair warranties, and also allows a consumer bringing an action under the Act to recover any attorney's fees incurred during the lawsuit. If you feel that the terms of the warranty are grossly unfair, you should contact an attorney, who can advise you as to whether the terms rise to the level of grossly unfair.

Protection for Used Cars

While the above information covers new car sales and leases only, some states have a lemon law that covers used cars as well. Some states cover vehicles purchased that have logged a certain mileage, others cover only cars which have been sold once, and still others extend protection only if the used car would have been covered by the original warranty. You will have to investigate the laws of your state to determine whether your used car is protected your state's lemon law.

Consumer Remedies--Refund or Replacement Vehicle

If your car meets the criteria for 1) a substantial defect, and 2) reasonable number of repair attempts, then you qualify for lemon law protection and have the right to get either a refund or a replacement car. You must first notify the manufacturer of the defect (though they should already have notice because of the attempted repairs), and if you are not offered a settlement to your satisfaction, you will likely be required to go to arbitration before you can sue the manufacturer in court.

Arbitration Process

Lemon law arbitration is a free, non-judicial (out of court) process in which either a panel or a single arbitrator analyze both sides of the dispute and reach a decision about what remedy to award you. Depending on state law, either the manufacturer will choose or you may select a state consumer protection agency program (although this option is becoming rare). If you have the option of choosing, the state program is preferable because they are less likely to be influenced by the manufacturer. Arbitration decisions in most states are binding upon the manufacturer but appealable in court by the consumer. In other words, if you don't like the arbitrator's decision, you can to sue the manufacturer in court if you wish. On the other hand, if you decide to accept the arbitrator's ruling, the manufacturer cannot appeal and that is the end of the case.

While you can appeal the arbitration ruling, you should be as prepared as possible in order to come to a quick and inexpensive resolution (attorneys charge hundreds of dollars an hour, while lemon law arbitration is free). Consumers who bring substantial documentation of their claims tend to do better than those who appear at the arbitration with little evidence. You should bring receipts and service records demonstrating how often the car has been in the shop; documents such as phone records indicating how often you contacted the dealer about the problem; and any ads or brochures that the car manufacturer may have created touting its product (manufacturers will most likely be held to the standards they claim in advertising).