How to Avoid Buying a Lemon Car
Lemon cars are new vehicles with serious issues or used cars that were previously returned to the dealer under your state’s lemon laws.
Ending up with a lemon car can leave a sour taste, but research, test drives and other tactics can help you identify lemons.
On the other hand, sometimes lemon cars are an easy fix, making them a good deal.
- A lemon car is one that had serious issues and was returned to the dealer
- You can avoid lemon cars with inspections, test drives and research
- Lemon laws are different from state to state
- Sometimes buying a used lemon car on purpose may be worth the risk
What is a lemon car?
A lemon car is a new vehicle with a manufacturer’s warranty that has an ongoing problem affecting its use, safety or value.
If the dealer or manufacturer can’t fix the problem after a reasonable number of attempts or a specified period of time, the manufacturer will refund or replace the car. In some states, this is the case even if you’re just leasing the car.
After fixing the problem, the manufacturer can resell the car. Depending on state laws, a lemon car may have a title with a “brand” describing it as a buyback or as a lemon law vehicle. However, a used car that has been sold multiple times might not show it’s a lemon law buyback on the title.
Lemon law basics
So you think you might have a lemon car on your hands — now what? Your eligibility for a refund or Each state has lemon laws with specific conditions that require a manufacturer to buy back or replace a lemon car.
Typical problems that lead to a lemon law buyback are electrical or transmission problems, bad brakes and faulty suspension.
Lemon laws don’t apply if the vehicle owner abused or neglected the vehicle in a way that may void the warranty, such as modifying the car or using a third-party mechanic to service it.
Your coverage under the lemon law can depend on things such as:
- Type of car: Some states’ lemon laws don’t cover recreational vehicles or motorcycles.
- Timeline and mileage: States can limit the time after purchase and maximum mileage to file a complaint.
- Cost and number of repair attempts: To qualify the car as a lemon, the repair attempts must exceed a set cost. Some states specify how long the car is out of service.
Check with your state’s Department of Motor Vehicles to understand how the lemon law process works, such as who you should file with and whether extended service contracts are covered.
The Better Business Bureau has a list of lemon laws by state.
At the federal level, the Magnuson-Moss Federal Trade Commission Improvements Act sets standards for warranty practices for both new and used cars. If your car doesn’t qualify for a state lemon law buyback, you may still be able to use the Magnuson-Moss Act to get compensated for breach of warranty.
Also, check with the National Highway Traffic Safety Administration to see if the car’s make and model are under a recall for manufacturer’s defects or have other issues. Recalled cars can also be eligible for lemon law buyback.
Steps to avoid buying a lemon
It may not always be easy to predict whether your car will be a lemon, but there are steps you can take to avoid buying a clunker.
Ask for a vehicle history report
Many dealers will offer a free CarFax report, but you should also ask for a full vehicle history report from providers approved by the National Motor Vehicle Title Information System.
You may have to pay for the report yourself, but it offers more detailed information about a vehicle, including:
- Title brands
- Accident history
- Owner history
- Repair history
- Safety recalls
If the manufacturer owns the car again after someone bought it, or if several repairs are shown for the same issue within a short time, it could be a sign that the car was a lemon law buyback.
Some states require the dealer to give a written disclosure to the first person to buy the car after it was repaired or even to affix a lemon law decal to the car.
Test drive and look for red flags
Manufacturers must repair the problems that made the car a lemon before they can resell it, but there could be other issues.
Take the car for a drive to see if you can detect any problems. Unusual sounds, exhaust smoke, squeaky brakes and other issues could be signs of trouble.
You also want to avoid buying a car that has been flooded. Check for water damage by looking under the carpet in the rear or the spare tire well. A musty smell can also be a bad sign.
Get an independent inspection
Go to an independent mechanic to inspect the car. The mechanic can put the car up on a lift, which could reveal troubling rust spots or evidence of an accident.
Have the mechanic double-check for any manufacturer recalls or technical service bulletins, including whether any needed services were completed.
A pre-purchase inspection may cost $100 to $200, although it could be higher for specialty cars like classics or sports cars. However, it’s a small price to pay to avoid headaches later on.
If the car isn’t seriously damaged but does need some repairs, you could ask the seller to deduct the cost from the price.
What to do if you’ve bought a lemon car
Talk to the seller
Understand the warranty coverage before you buy the car. If you feel like you’ve bought a lemon car, talk to the seller and find out if the vehicle is still under warranty.
Each state has time limits covering when lemon law claims must be filed. A lemon law claim is one of the few ways to back out of a new car after signing.
Request replacement or refund in writing
Send a certified letter to the manufacturer or dealership fully detailing the problems and the steps that have been taken to repair them.
Explain that the problems continue despite these attempts and that your next step will be to pursue a replacement or refund following your state’s lemon laws.
You should include dates and times of services, the length of time the car has been out of service and all past communication with the dealership and manufacturer. The dealership may help you through the lemon law process with the manufacturer.
Some states require you to give the manufacturer an opportunity to address the problem before filing a lemon law claim.
To file a lemon law claim, you will need to show documentation such as:
- Purchase order or sales contract
- Repair orders or receipts
- Copy of notice letter to manufacturer for a new vehicle
- Extended service contract (if applicable)
- Lease agreement (if applicable)
- Any other relevant documentation or photos
Keep track of all repairs and communication
If you want to pursue legal action against the seller, keep a record of:
- All repair estimates and work orders to show the problem can’t be corrected within the limits of the state’s lemon law
- Any correspondence with the dealership or manufacturer to show that you gave the seller a reasonable chance to solve the problem.
For the correspondence, also keep notes with the dates and times of any phone or in-person conversations, as well as any letters, emails or other communication.
If you do not get satisfaction under your state’s lemon laws, talk with an attorney about seeking relief under the Magnuson-Moss Act or your state’s consumer protection laws.
Buying a lemon car on purpose
You can turn someone else’s lemon into lemonade by buying a lemon car on purpose.
Ideally, the car has already had a significant problem corrected and may have remaining coverage under the manufacturer’s warranty. You may be able to get a perfectly usable newer car for less than the average price.
Often, these cars are sold as-is. Understand what warranty coverage is available through the dealer, as well. If the car is out of warranty, you will be responsible for any repair costs.
In some states, like Georgia, the seller must provide a 12-month/12,000-mile warranty for any repaired lemon car.
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