With all the moving parts in a lemon law claim, the major one that you’re likely focused on is the form of compensation you get. Usually there are two choices: either a buyback (refund) or a replacement. Here, we’ll discuss the refund and discover how it is structured. You’ll find that each state will vary somewhat on how your refund is calculated.
It’s vital to have a lemon law attorney work with you on your case so, first, you win against the manufacturer, and, importantly, your desired form of compensation (such as a refund) is pursued and negotiated to your benefit, within state law parameters. We’ll see how timely reporting of the vehicle’s defect is key in the process and how a standard formula is used with various state-level adjustments to calculate how much your refund will be.
Don’t worry if this sounds a bit complicated; your lemon law attorney will be well-versed in your state’s treatment of lemon law refunds and how the calculations are determined. As part of your overall representation for your case, the attorney will discuss the refund process and show you how it is arrived at, along with the amount of money you can expect for compensation.
The Lemon Law Process
Before we get into how your refund is calculated, we’ll start with how you can take advantage of a lemon law attorney’s free consultation. At this meeting you can present your evidence, and the attorney will determine if your claim is a substantial defect that severely impacts the vehicle’s use, value, or safety. That, and additional state lemon law criteria, are used to qualify your vehicle as a lemon. If your claim is valid (and the manufacturer cannot repair the vehicle within the allotted number of repair attempts), the lawyer can proceed with representing you against the manufacturer.
Each state’s lemon laws are different. The attorney will handle the notification of the manufacturer. The manufacturer is usually given a short period after receipt of the claim notification for one last repair attempt (often within a 7-15 day window). If it cannot or will not repair the vehicle, then the claim will proceed.
Often lemon law cases will settle out of court. Your attorney will ask you ahead of time, as the claim is being structured, what type of compensation you want. In this context we’ll review how pursuit of a buyback refund is handled.
For more information on arbitration and other frequently asked lemon law questions, click here.
What is a Lemon Law Buyback?
As we mentioned, it is a refund of your money relating to your purchase of your defective vehicle, minus a mileage offset fee. We’ll go into this discussion with the supposition that your vehicle qualifies as a lemon. Your attorney is pursuing your claim against the manufacturer for compensation, and you have selected a refund as your compensation. Now, let’s see how this can play out.
How is a Buyback Offset Charge Calculated?
First, we’ll illustrate how the total refund is impacted by the subtraction of a mileage offset fee. This is the amount that the manufacturer is allowed against the time you owned the vehicle before you first reported a problem. This formula (or one quite similar) is used to compute the offset fee:
Mileage Offset = (Actual Price of Vehicle x Miles Driven at First Repair Attempt) / 120,000
The ‘actual price of the vehicle’ includes:
- The Base Model Price: The starting MSRP of the vehicle.
- Factory-Installed Options: If you had upgrades like a premium sound system, specialized wheels, or other options installed on the car when it left the factory.
- Dealer-Installed Options: Accessories you paid for at the dealership, like a roof rack or window tinting, provided they are listed on the purchase contract.
- Transportation/Destination Fees: The “delivery charge” listed on the window sticker.
The ‘actual price’ figure gets multiplied by the miles driven at the first repair attempt. You take that resulting figure and divide it by the Statutory Life of the Vehicle. This can vary by state and sometimes by type of vehicle. We are using 120,000 as an example.
The substantial defect at the heart of your claim must have been first reported during a defined mileage number (and often timeframe). Let’s look at a simple example. The exact delivery date of your vehicle is the “starting clock” for the computation, along with your state’s laws.
If you bought a car for $50,000 and first brought it in for an engine defect at 10,000 miles:
Multiply $50,000 by 10,000 = 500,000,000
Divide 500,000,000 by 120,000 = $4166.66
So, $4166.66 would be deducted from your total refund for the time you drove the car without the defect.
Note: While the offset is based on the vehicle’s price, your actual refund includes your down payment, all monthly payments (including interest), and taxes, minus this mileage offset fee. Plus, the manufacturer pays off the remaining loan balance directly to the lender.
Key point: What happens if you reported the issue at 10,000 miles (which in our example is within your state’s 18-month/18,000-mile window – your attorney will know what this window actually is for your state; it can vary), and the manufacturer took over a year and five repair attempts to unsuccessfully fix the car… What is the mileage used in the offset formula?
Lemon laws are confusing. Read our guide to the lemon law complaint process.
You would be protected as you first reported the defect at the 10,000-mile mark. That means your mileage offset fee will be calculated at that point, not later, after all the repair attempts.
Note: If a consumer is past the reporting window (whatever it is in their state—12 months, 18 months, etc.), they may still qualify if the first report happened while the car was still under the original manufacturer’s warranty.
For the offset fee, the manufacturer calculates it and sends your attorney a buyback summary offer. This offer includes the full refund paying off the loan, payments, and additional costs we mentioned earlier, minus the mileage offset fee. The attorney will double-check this and ensure it is computed correctly. Sometimes consumers and manufacturers can’t agree on the total refund amount. In those cases an arbiter may be used to decide it.
How a Lemon Law Attorney Helps You Gain Maximum Compensation?
We’ve noted that a lemon law attorney must not only prove that a vehicle is a lemon, they must also know how to apply the state’s lemon laws per the refund computation. When the manufacturer provides the buyback offer, it’s the attorney’s job to ensure that it is an offer that protects the client’s interests and is in keeping with state law.
The above is in addition to the work the attorney does to structure the case: all the evidence gathering and analysis, interviews with expert witnesses, and so much more that goes into proving that a vehicle’s problems constitute substantial defects that qualify it as a lemon. Much of this work is time-sensitive and dependent on state-specific lemon law criteria. Through the experience and expertise of the attorney, the client has the best opportunity to gain maximum compensation, including incidental charges like towing and rental cars, and sales taxes and registration fees.
As we mentioned, most lemon law cases settle out of court. A lemon law attorney’s negotiation skills hold the manufacturer accountable, as some manufacturers may try to avoid or dismiss claims.
Trust Allen Stewart, P.C. for Comprehensive Lemon Law Representation
Allen Stewart, P.C. encourages you to schedule (866-440-2460) your free consultation today. It costs nothing to find out if your vehicle is a lemon. You also won’t have to pay us to represent you, as the manufacturer is obligated to pay your attorney fees when you win your case.
It’s vital to have an experienced, winning lemon law attorney fighting for you. Allen Stewart, P.C. offers you the benefit of our experience winning cases across the country. We are well-known lemon law attorneys in California, Texas, and New York. We offer the comprehensive representation you need, even for cases involving the latest vehicle technologies.
Now is the right time to contact Allen Stewart, P.C. (866-440-2460). Schedule your free consultation and have us review your evidence. Should your claim be valid, we will represent you against the manufacturer and fight for compensation? Don’t wait. Call Allen Stewart, P.C. now (866-440-2460).