On this blog we usually focus on the criteria required for a car to qualify as a lemon, the process of getting to a lemon law settlement or resolution, and how the claim is proven and the case won. But what happens afterward? One of the lemon law compensation types the consumer can select is a buyback. How is that structured, and are there any points a consumer should take into consideration before choosing a buyback for compensation?
We’ll get into how a buyback can affect your finances, and the information you may wish to consider when dealing with buybacks. Plus, if you haven’t pursued your lemon law claim yet, and are wondering how to get started, Allen Stewart, P.C. offers a free consultation (866-440-2460) to answer your questions.
Here’s something else to consider: Maybe you’ve wondered about the other side of the equation… What if you’re shopping for a car? We’ve written about spotting a potential lemon before you buy, and another caveat is checking the title, where it could say “lemon law buyback” or “manufacturer’s buyback.” There are some issues you’ll want to watch for should you be faced with this situation. We’ll cover those, as well.
You’ve Won Your Lemon Law Case: What Does a Buyback Entail?
Congratulations, you’ve won your lemon law case, and you’re deciding on compensation. Or maybe you’ve already decided on a buyback. Do you need more information, or are you having second thoughts, before you accept the buyback as compensation? Let’s look at what’s involved, so you can make an informed decision.
For more information on arbitration and other frequently asked lemon law buyback questions, click here.
What is a Buyback?
It’s one form of lemon law compensation that allows the consumer to leave the problem lemon vehicle behind and start again. The manufacturer is obligated to provide compensation, and if the consumer selects a buyback, there is more to the situation than the manufacturer writing a check. They will do so, but a few other points are involved, as well.
The Process
If the consumer has a loan on the vehicle, the manufacturer coordinates with the lender. The manufacturer pays off the loan. The manufacturer takes possession of the vehicle. Then the consumer is paid the buyback amount, per this formula:
(Original Purchase Price + Taxes + Fees + Incidental Costs) MINUS (Mileage Offset Fee + Loan Payoff Amount). Your lemon law attorney can help calculate the amount you will receive.
Mileage offset fee defined: (Miles driven before first repair attempt / Average expected vehicle life in miles) x Actual Purchase Price = Mileage Offset Fee
Key takeaway: Often, with a typical new car purchase, if the problem is documented within approximately the first 10,000 miles, the offset fee is usually a small fraction of the buyback amount. Consult your attorney, as your vehicle’s costs, your miles driven, and other details in your situation will be unique, and will affect your buyback calculations.
The main idea of receiving the buyback is to regain control of your situation. You will be rid of the vehicle, and your loan will be paid off. You’ll also get a payment from the manufacturer, along the lines of the formula we shared above.
But why would anyone go for this option, instead of a replacement vehicle?
Perhaps you don’t want to get a replacement car or truck that’s similar in type to the lemon you just gave up. You may wish to try a different manufacturer for your next vehicle, so a buyback looks like the best compensation option.
Please be advised that any aftermarket parts you paid for, or other out-of-pocket modifications won’t be included in your buyback payment, unless this has been specifically negotiated as part of the settlement.
Not sure how a lemon law buyback would affect your situation? Need to consult with a lemon law attorney? Take advantage of our free consultation. Call Allen Stewart, P.C. now (866-440-2460) or schedule your consultation online.
Buybacks and Shopping for a Replacement Vehicle
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It could be, as you shop for a replacement vehicle after you win your lemon law case, you’re attracted to various used cars. It’s often true you can buy these branded title cars (ones that say the car is a “lemon law buyback”, or “manufacturer’s buyback”) for a discount. After just getting done with a lemon law case, it’s understandable that you might want to avoid these branded title vehicles. Yet, the initial cost savings on these cars can be tempting, especially if it’s a vehicle you really want.
Please note, that while these initial discounts on branded title vehicles can seem attractive, they could present financial hurdles later.
Reduced Resale Value
One main issue is the branded title. The vehicle never sheds that designation; so when you try to sell it or trade it in, you will automatically get less for it. This could make your initial savings when buying the vehicle, not so attractive, after all.
How Do Warranty Coverage and Claims Work with Branded Title Vehicles?
Note, that even in states that cover used cars under lemon laws, under state law, should a branded title car exhibit any lemon characteristics again, state law likely won’t cover it. If problems arise, consumer laws or federal laws (such as the Magnuson-Moss Warranty Act) might be possible avenues for pursuing a claim.
The lemon law buyback vehicle may come with some time left on the original manufacturer’s warranty. Also, (and you can check the specifics for the vehicle in question), in some instances, the manufacturer provides an additional 12-month/12,000-mile warranty covering the defect that led to the buyback. The manufacturer could also certify that the vehicle has been repaired to factory standards. This is no guarantee that problems could not happen again, so even though a lemon law buyback could be a big savings now, it could lead to headaches later. That’s because even if the problem that caused the car to be designated a lemon is fixed, it may have affected other vehicle systems.
Why It’s Important to Rely on a Lemon Law Attorney’s Expertise
We’ve discussed some of the issues that can come up regarding buybacks. That’s not to say that choosing a buyback as lemon law compensation is a poor choice; but a person needs to know what’s involved, and if the buyback works for them. It can surprise some people because they may not have taken the offset fee into account when choosing their lemon law compensation. Also, everyone who is involved with lemon law issues is at a different stage in the process.
- Maybe you are in the middle of the situation, but you’ve seen enough of this manufacturer, and you can’t wait to get a buyback and walk away.
- Or you have just started the process and are trying to research compensation alternatives.
- You may not have consulted an attorney yet, and need to present your claim and see if it’s valid, so you can find out if you have a case.
All these and more scenarios are situations that lemon law attorneys are well-acquainted with. These lawyers know how to hold manufacturers accountable and put their clients in the best position to win maximum compensation, whichever type they choose (buyback or replacement, or in some cases, a specific negotiated settlement).
Contact Allen Stewart, P.C. for Comprehensive Lemon Law Representation
As experienced, highly successful lemon law attorneys, you can trust Allen Stewart, P.C. to represent you in any type of lemon law case. We have won many cases across the country, and are recognized as top lemon law lawyers in New York, California and Texas. We fight aggressively for your rights to ensure you receive just compensation for your lemon vehicle.
You might wonder if you need a lawyer. It’s true that the manufacturer will defend its interests with its legal team. You need top lemon law attorneys who will protect your rights. Allen Stewart, P.C. anticipates and counters manufacturers’ strategies of avoiding, denying, or minimizing your claim, so you have the best opportunity to win the compensation you deserve.
We encourage you to contact Allen Stewart, P.C. for your free case review. There is no cost, and there are also no costs for us to pursue your case, as the manufacturer is obligated to pay your legal fees when you win. Don’t wait. Time is of the essence with lemon law claims. Call Allen Stewart, P.C. now (866-440-2460) or schedule your consultation online.
This information brought to you by Allen Stewart P.C.