Buying a vehicle is a big step and often exciting too, especially if you’ve finally found the car or truck you’ve always wanted. Sometimes a vehicle can suffer from repeated, unfixable problems, causing it to be classified as a “lemon.” If this has happened to you, or you want to know what to do in this situation, we’ll go through how it could unfold and how you can benefit from a lemon law attorney’s expertise.
Between warranty fine print and lemon law itself (which can vary state to state), people can get confused regarding their rights. We’ll review the different types of warranties so you’ll know more about what your rights are under those, and we will explore what a substantial defect is, which is the core of all lemon law claims.
Manufacturer’s Warranties vs. Extended Warranties: What’s the Difference?
To understand your rights, you first need to know what kind of coverage your vehicle actually has. Let’s review the legal difference between an original manufacturer’s warranty and an extended warranty.
An original manufacturer’s warranty is a promise directly from the company that built your car (such as Ford, Toyota, or General Motors). It comes automatically with the purchase of a brand-new vehicle at no extra cost. This warranty is the manufacturer’s guarantee that the vehicle was built correctly. If something breaks or malfunctions within a specific timeframe or mileage limit (for example, 3 years or 36,000 miles), the manufacturer promises to fix it for free at one of their authorized dealerships.
An extended warranty is not actually a warranty in the legal sense; it is an optional service contract that you purchase separately. You can buy it when you purchase the car, or you can buy it years later. These contracts are often sold by third-party companies. To understand extended warranties, you can think of them like a specialized insurance policy for mechanical breakdowns. If your transmission fails after your original manufacturer’s warranty has expired, the extended warranty company agrees to cover the repair costs, subject to deductibles and specific exclusions listed in your contract. Because it is a contract rather than a manufacturer’s guarantee of build quality, it is governed by an entirely different set of rules than those under state lemon laws.
Note: When you meet with a lemon law attorney (866-440-2460), they will review the terms of your warranty. The other major point they will analyze is if your vehicle is exhibiting a substantial defect as defined under lemon law.
For more information on arbitration and other frequently asked Breach of Warranty questions, click here.
What is a “Substantial Defect” Under Lemon Law?
We will define what a substantial defect is under lemon law. Read on, as even if your vehicle’s issue and your warranty coverage may seem like they don’t qualify it as a lemon, you may still have rights under state lemon laws. See our points about this under the “Are There Gray Areas I Should Know About?” section below.
State lemon laws are based on a core concept, the substantial defect. This is a defect that isn’t a minor nuisance, even if it is recurring. A defect is considered substantial if it seriously impairs the vehicle’s use, value, or safety.
- Defects that put your life at risk—such as faulty brakes, steering wheel locking, random engine stalling while driving, or airbags that fail to deploy—are often easily classified as substantial.
- If a defect prevents you from driving the car as it was intended to be driven, it impairs its use. For example, if the transmission slips so badly that you cannot safely accelerate onto a highway, or if the vehicle simply refuses to start multiple times a month, its primary use has been compromised.
- A defect impairs value if it makes the car worth significantly less than a normal vehicle of the same age and mileage. A major engine defect or a structural issue that cannot be permanently fixed drastically lowers the resale value of the car.
A substantial defect is a problem that occurs during the original manufacturer’s warranty coverage period and cannot be fixed after a “reasonable number” of repair attempts. Usually, this means the manufacturer is allotted 3–4 repair attempts (have your attorney check your state’s rules) for the exact same issue and it has not been repaired, or the vehicle has been out of service for a cumulative total of 30 days or more within a single year.
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Lemon Law Protection Under an Original Warranty
If your vehicle develops a substantial defect while it is still covered by the original manufacturer’s warranty, you are in the strongest possible position under state lemon laws. State lemon laws are written to hold manufacturers accountable under that warranty.
When you bring a car to an authorized dealership with a major issue under the original warranty, the manufacturer is legally obligated to fix it. If they try and fail to fix the same substantial defect multiple times, you may have recourse to compensation under state lemon laws because the manufacturer has failed to fulfill its contract with you. If your car is declared a lemon, the manufacturer must either give you a full refund of your purchase price (minus an offset fee for the miles you drove before the problem started) or replace the defective vehicle with a brand-new, comparable model.
Wondering if your vehicle qualifies as a lemon? Contact Allen Stewart, P.C. for a free consultation (866-440-2460).
Will an Extended Warranty Protect You Under Lemon Laws?
If your vehicle exhibits a substantial defect after the original manufacturer’s warranty expires and you are covered by an extended warranty, your legal path may, in many instances, be different. Instead of state lemon law, consumers with extended warranties are primarily protected by a federal law known as the Magnuson-Moss Warranty Act.
The Magnuson-Moss Warranty Act is a federal consumer protection law that regulates warranties and service contracts. If you purchased an extended warranty (service contract) and the company repeatedly fails to fix a covered mechanical issue or takes an unreasonable amount of time to perform repairs, they may be in breach of contract. Your attorney may be able to pursue monetary compensation for the diminished value of your vehicle, reimbursement for your out-of-pocket repair costs, and payment of your attorney’s fees.
Lemon laws are confusing. Read our guide to the lemon law complaint process.
Are There Gray Areas I Should Know About?
Yes; consult a lemon law attorney to verify what your rights are in your situation.
Note: If you first brought your vehicle in for repairs for a substantial defect during the original manufacturer’s warranty period, you should alert your lemon law attorney. This is a critical factor that could qualify you for coverage under state lemon laws, which can, in some states, extend to used and certified pre-owned cars. For instance, if your vehicle has a transferable portion of the original factory warranty remaining, a state lemon law might still protect you alongside any extended warranty. Because these laws vary, it is vital to consult a lemon law attorney (866-440-2460) to explore this possibility and protect your rights.
The Advantage of Hiring a Lemon Law Attorney
The vast majority of lemon law and warranty claims are settled out of court through structured negotiations, so you likely won’t have to worry about going to court. A lemon law attorney gives you the best opportunity to gain a monetary settlement due to their negotiation skills. Attorneys know the strategies manufacturers/dealers/third-party extended warranty issuers may use to avoid or dismiss your claim. The lemon law attorney’s focus is on your rights and getting you the compensation you may be entitled to.
Contact Allen Stewart, P.C. for Comprehensive Lemon Law Representation
Dealing with a defective vehicle can bring up questions about if you can receive compensation and from whom, depending on your warranty and other circumstances. Allen Stewart, P.C. has won many lemon law and Magnuson-Moss Warranty Act cases across the country. Our attorneys are well-known in California, New York, Texas, and around the nation for fighting aggressively for client rights to compensation.
Do not let auto manufacturers or third-party extended warranty issuers intimidate you. You do not have to pay us to represent you, as the Magnuson-Moss Warranty Act and state lemon laws protect you. They provide fee-shifting provisions where the vehicle manufacturer or the extended warranty obligor is obligated to pay your legal fees.
Take advantage of our free consultation to present your evidence to our attorneys. Contact Allen Stewart, P.C. today. Call us now (866-440-2460) or schedule your free case review online.