Dealing with car repairs can be a frustrating experience—especially if you recently purchased the vehicle. If your car isn't running as it should or keeps breaking down, it might be a “lemon.” This word describes a car that repeatedly malfunctions, often due to a chronic problem.
If your vehicle qualifies as a lemon under state or federal law, you might be entitled to a refund or to have the car replaced.
Owners with lemon cars often find themselves taking the vehicle to the repair shop multiple times. Sometimes, the problems are so extensive that you can't (or shouldn’t) drive it. However, taking your car to the shop repeatedly doesn't necessarily mean that the vehicle is a lemon. And if you're dealing with a problem that's fixable with a single repair, you should consider resolving the repair under the car's warranty or service contract.
How Lemon Laws Protect You
Most state and federal lemon laws enforce an existing warranty on the car. If the manufacturer or dealer fails to repair the vehicle under warranty, a lemon law might require the non-compliant party to replace the vehicle or refund your money. However, this obligation isn't automatic. The law allows the dealer or maker to fix the problem within a reasonable amount of time.
Car Warranties: The Basics
It’s important to know something about car warranties and how they relate to lemon laws. Here are a few brief explanations.
- Express warranty. If you purchased a new car, it likely came with a written warranty (sometimes called an "express warranty"). An express warranty is an explicit promise (usually made in writing) from the car manufacturer or dealer that the car will perform as it should for a particular time. In most cases, express warranties don’t cover everything that could go wrong. For instance, warranty coverage might limit repairs to the first three years or 36,000 miles of ownership, whichever comes first. State and federal lemon laws are used to enforce an express warranty when the dealer or maker fails to honor it.
- Implied warranty. An implied warranty is neither spoken nor written—and it’s not a promise that everything in the car will operate correctly and that the car won't break down. Rather, it’s a promise that the car has no defects that will prevent it from running as it should. An implied warranty is automatic and effective when you purchase the car. However, the dealer can disclaim an implied warranty in the buyer's guide. (The buyer's guide is a notice that a dealer must post on the car that states whether the car comes with any warranty, and if it does, what the warranty covers.) The dealer can disclaim any implied warranties in the buyer's guide. Specifically, the guide will say that the dealer is selling you the car "as is” (the car has no written or implied warranties). Most state lemon laws don't apply to implied warranties. But the federal lemon law might protect you if the dealer breached an implied warranty (more below).
- Service contract. A service contract, or "extended warranty," isn’t a warranty at all. Instead, it’s a separate contract that covers particular repairs within a specified period. Service contracts apply when the new car is out of warranty, or when a used car doesn’t have an implied warranty.
These requirements apply only to dealers. A private seller usually sells you the car "as is" because a private seller isn't required to provide you with a buyer's guide or sell you a car with an implied warranty unless your purchase agreement specifically includes one.
State Lemon Laws
Many states have lemon laws that protect you if a dealer sells you a defective car that came with an express warranty. Typically, this protection covers new cars within a certain age or mileage range, such as the first 12 months or 18,000 miles, whichever occurs first.
Most laws require you to give the dealer a reasonable opportunity to repair the vehicle. If your vehicle qualifies as a lemon and the problem persists even after you gave the dealer or maker a reasonable opportunity to fix it, then you might be entitled to the following:
- a refund of the car's purchase price, or
- replacement of the vehicle.
Also, you might be entitled to attorneys' fees if the dealer or maker denies your request for a refund or replacement and you file a lawsuit under your state's lemon law. Be careful, though. Even if your car is a lemon, you’ll likely remain liable for payments on the car loan or lease because lemon laws don't typically cancel the debt related to the vehicle. But your state's consumer laws might give you the right to cancel or rescind the car loan under certain circumstances.
Lemon laws are complicated and vary from state to state. You should consult with a consumer protection attorney in your state to determine your rights.
Federal Lemon Law: The Magnuson-Moss Warranty Act
If your state’s lemon law doesn’t provide you with relief, you might find protection under a federal law called the "Magnuson-Moss Warranty Act" (MMWA). Specifically, if you purchased a service plan or extended warranty within 90 days of buying a new or used car, the MMWA protects you. While many state lemon laws only cover express warranties, in some instances, the MMWA applies to implied warranties, which is helpful if your vehicle is outside of the written warranty.
As with state lemon laws, under the MMWA the dealer gets a reasonable opportunity to fix the problem. Unlike some state lemon laws, however, you aren’t entitled to a replacement vehicle under the MMWA. Instead, you can seek a refund of the purchase price, as well as attorneys' fees, in some cases.
When Your Car Is Out of Warranty
Some states have consumer protection laws that prohibit dealers from misrepresenting the condition of the car. So, if your vehicle repeatedly breaks down after your warranty expires, or if you bought a used car as-is and didn't get a service plan, you might be entitled to some form of relief.