Lemon Laws and Lemon Buybacks

A lemon law is a law that says the car dealer is responsible for selling a vehicle in working order and fully disclosing issues to the customer at sale. Lemon laws generally mandate that the car dealership make a good faith effort to repair the issue, replace the vehicle with a comparable one or buy back the vehicle.

There is a federal lemon law in the United States and many states have their own versions of lemon laws. Some states regulate warranties, forcing dealers to buyback new or used cars they sold with a warranty but cannot repair in a reasonable period of time.

The Factors that Go Into a Buyback Offer on a Lemon

Unless the engine falls out of the car right after you drive it off the dealer lot, they’re not going to give you all of your money back. This is why a good lemon law buyback calculator takes multiple factors into account. But what factors go into a buyback offer?

• The first is how much money you’ve actually put into the vehicle.

The original value of the car is a factor. After all, they aren’t going to give you the value of a new car if you bought it used. If you paid cash up front for the car, they owe you that minus wear and tear and a few other things. If you have taken out a car loan, they owe you your down payment, the monthly payments made to date and possible compensation for repairs made and your inconvenience. This is enough for a ballpark estimate of what the car dealer will offer as a buyback value. You can’t get an exact answer, since they may or may not reimburse you for loan origination costs or taxes paid on the vehicle.

• The next factor is the car’s current condition.

How many repairs have been made? How much work has the dealership already put into it? And how much time has elapsed? If the dealer has made one or two repairs but you’ve driven the car extensively, they may reduce the amount they offer in the buyback because you got some use out of the car. If the car has sat in their shop for a month or more, they owe you what the car is worth and often something for your inconvenience, too. You may be able to be compensated for out of repair costs you’ve paid, the cost of a replacement rental car while it was in the shop, and the cost to tow it to the repair shop

The dealer is not obligated to pay off your negative equity. The negative equity can include the balance from a prior car loan rolled into the new car loan and the depreciation of the car that caused it to be worth less than the balance of the car loan.

If you get into a dispute regarding the buyback offer, you may have to pay the arbitration fees if you lose your case. And you may be on the hook for the money you paid for a third party mechanic to assess the vehicle.