Often on this blog we discuss how to get to the buyback phase, the steps involved to get compensation for your defective vehicle. There are other ways buybacks can affect you, and we’ll look at a few of them here. The key takeaway is to know that a vehicle that is declared a lemon will always carry that brand with it, regardless of how often it changes hands, and that designation will cause the vehicle to be worth less than a model not marked as a lemon.
The Temptation to Buy a Former Lemon Vehicle at a Discount
So how does all this work? It’s easy to see why people ask about this because former lemon vehicles can often be bought at a substantial discount. You may see a model of a car or truck that you’ve had your eye on and discover that it’s a former lemon. But the manufacturer is supposed to fix the car to make it conform to standards; i.e., the problem that qualified it as a lemon has been successfully addressed. You would think this would end the issue, but that isn’t always true.
The Lemon-Branded Title Stays with the Vehicle Forever
As with many aspects of lemon law, there are various gray areas. Just because the problem that qualified the vehicle as a lemon was repaired doesn’t mean the car or truck loses that lemon brand. That sticks with the vehicle forever, and it forever brings down its value, plus these vehicles can be harder to finance.
We’ll examine this issue in more detail and other trade-in-related points so you’ll be aware of what you might face should you try to trade in a lemon vehicle. First, let’s see how a vehicle is classified as a lemon.
How a Vehicle Qualifies as a Lemon?
Each state has its own lemon laws. They’re based on a main premise that a vehicle has to exhibit a substantial defect that severely impacts its use, value, or safety. The manufacturer is allotted a set number of repair attempts under state law. Often, this is 3–4 repair attempts. If the vehicle cannot be fixed across these attempts, and the vehicle satisfies other state law criteria (usually dealing with reporting timeframes and mileage), then the attorney can pursue the case after alerting the manufacturer.
For more information on arbitration and other frequently asked lemon law questions, click here.
The manufacturer may (depending on the state) get one last attempt to fix the vehicle. If it cannot or will not repair it, the claim can proceed. The attorney will work to prove that the manufacturer should be held accountable for the defect. The goal is to have the manufacturer provide the consumer with a replacement vehicle or buyback.
When the Consumer Gets the Buyback – What Happens to the Vehicle?
Let’s skip ahead—the attorney has won the case, and the client decides on a buyback. The manufacturer buys the car back and settles with the consumer (the loan is paid off, and the down payment, payments, and other costs, minus a mileage offset fee [more on that in a moment], are returned to the consumer). Now what happens?
The manufacturer finds a way to fix the vehicle and sells it. A dealership buys it, and there is one glaring point that potential buyers must watch for: if that vehicle says ‘manufacturer buyback’ or ‘lemon buyback,’ that’s an instant and permanent hit to that vehicle’s value of anywhere from 20-40% vs. a ‘clean’ version of the same car or truck.
That’s the point that many people don’t know. They might be able to get the vehicle at a discounted price since it was a lemon, but that lemon-branded title will follow that vehicle the rest of its existence, making a future trade-in difficult or, in some cases, impossible.
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Why Does a Lemon-Branded Title Scare Some Buyers Away?
It can scare individual buyers and dealerships away because the lemon-branded title is an enduring question mark. People think, “The vehicle failed once. Could it fail somehow again?” Seeds of doubt are planted in some buyers’ minds. They shy away from these cars when they could go buy another car with no such history.
There are people who do buy lemon vehicles, and that’s understandable. There is a discount on these, and suppose it’s a vehicle you’ve wanted. This might be your chance to own it for much less than the price of a new vehicle. It’s good to know what you’re getting into, as various dealers won’t let you trade it in when you decide to, or you may face other trade-in hurdles, including getting little for the vehicle.
Lemon laws are confusing. Read our guide to the lemon law complaint process.
You could call various dealers before you buy the lemon car or truck. See what their policies are for taking former lemon trade-ins. Then, you will have information you can use later, should you wish to trade that former lemon in.
Other Ways Trade-in Value is Affected by Buybacks
Suppose you buy a new car. It costs $40,000. For that purchase, you trade in your old car, which is valued at $10,000. So, you finance the remaining $30,000. This new car you bought then turns out to be a lemon. When you get your buyback (after hopefully winning your lemon law case), included in your buyback is the $10,000 value of that old car trade-in. That counts the same in your buyback as cash does.
It’s important to remember if you had ‘negative equity’ from a previous trade-in rolled into your loan, you may still be responsible for that portion of the balance.
Also, you will pay a mileage offset fee that is deducted from your buyback total. (We referred to that above.) This is calculated from the mileage at the first report of the vehicle’s defect. Because this fee increases the more you drive the vehicle before that first report, it is critical to document defects immediately. Consult your attorney for the mileage offset fee calculation used in your state.
Key Takeaway: We said that a lemon title never goes away. True, but sometimes vehicles are sent to other states, which might go softer on lemon-title branding. Even if a title looks “clean,” it’s recommended to get a CARFAX Report or AutoCheck to check if a vehicle has a lemon history.
How a Lemon Law Attorney Can Help You
A lemon law attorney’s representation is vital when your vehicle exhibits a substantial defect that severely impacts its use, value, or safety. The frustration and complexity of a lemon law claim take you from trying to get the car repaired to gathering evidence to presenting it to the attorney. The attorney, via their knowledge and experience, determines if, under state law, your vehicle qualifies as a lemon, then works to prove the defect so you can gain compensation.
The manufacturer, meanwhile, may not always negotiate a settlement (how most lemon law cases are resolved) right away. They may try to challenge, dismiss, ignore, or otherwise avoid your claim. They may even try to blame you for neglecting or abusing the vehicle, accusing you of causing the vehicle’s problems. The attorney anticipates these challenges and focuses on protecting their client’s rights and gaining compensation for the defective vehicle.
Trust Allen Stewart, P.C. for Expert Lemon Law Representation
With all the complexities involved in lemon law, including how trade-in value is affected, it’s important to take advantage of our free case analysis. If your vehicle is exhibiting a problem, even if you aren’t sure if it is severe enough to qualify as a lemon, have our attorneys review your evidence. Lemon laws were created to protect your rights and to hold the manufacturer accountable. We encourage you to call Allen Stewart, P.C. now (866-440-2460) or contact us online to schedule your free consultation.
Are you worried that you can’t afford a lawyer? You won’t need to be concerned about that, as the manufacturer is obligated to pay your attorney fees when you win your case. Please note that the manufacturer will absolutely protect its interests with its legal team. It is vital that you have an experienced attorney representing you. Allen Stewart, P.C. is a well-known lemon law firm that has won many cases across the country. We are renowned attorneys in New York, Texas, and California. We will fight for you to gain the full compensation you are entitled to under the law.
Time is of the essence with lemon law claims. Contact Allen Stewart, P.C. now (866-440-2460), or contact us online to schedule your free consultation.