Home > Auto Loans > Are You Driving a Lemon?

Comments 0 Comments

You purchase a brand-new vehicle to avoid the issues that sometimes accompany older models. With a new car, you know exactly what you’re getting into. That’s unless your new car is a lemon.

It’s what the car industry calls a new vehicle riddled with problems from top to bottom, with no apparent solutions. According to Nolo, an estimated 1% of new cars manufactured each year — about 150,000 — are lemons.

Fortunately, there are ways to deal with what seems like a never-ending headache.

What Is a Lemon?

The car you’ve been dreaming of is now sitting in your driveway glistening in the sunlight, so you decide to take it for a spin. You get in, push the start button and hit the road. Five minutes into your ride, the electrical system goes haywire and the car shuts down.

Infuriated, you take it to the dealership to get it repaired, under warranty and at no cost to you. The following week, the car shuts down again. The malfunctions and emergency service appointments continue unabated. Why can’t they figure out how to fix it?

It looks like you have a lemon on your hands. Your vehicle is a problem on wheels and practically unsafe on the roadway.

According to Daily Finance, vehicles should meet these criteria to be considered under state lemon laws:

  • The problem started early on in your ownership of the vehicle.
  • You reported this problem promptly to the dealer and it was addressed under your manufacturer’s warranty.
  • The problem persisted (repeatedly, normally three or more times) after the dealer tried to fix it.
  • The problem is causing substantial impairment in the vehicle’s use, value or safety.

You can also take the online questionnaire offered by the law firm of Kimmel & Silverman to see if your car might qualify under the lemon law.

Lemon Laws to the Rescue

After months of dissatisfaction, you feel hopeless and are unsure how to proceed. That’s when the lemon laws kick in to protect you.

For starters, you’re entitled to legal representation at no cost to you. Says Daily Finance:

Thanks to lemon laws in all 50 states (and Washington, D.C.) you can probably hire a lawyer for free who will arrange for the dealer to buy back your car. If an attorney who specializes in lemon laws loses your case, they don’t get paid. If they win, it’s the car manufacturer who pays the legal fees.

Because the laws vary by state, you should check with your local consumer protection agency to determine how to proceed. It’s also important to note that some state laws also cover used vehicles.

What happens next? Nolo says:

If your car meets the lemon law requirements for your state, you have the right to obtain a refund or replacement car from the manufacturer. Although the process for getting this relief is different in each state, in all states you must first notify the manufacturer of the defect. If you’re not offered a satisfactory settlement, most states require you to go to arbitration before going to court.

So, either way, you won’t be stuck with a dysfunctional vehicle if your car qualifies.

 Breach of Warranty Claim

Don’t qualify under the lemon laws? The Magnuson-Moss Warranty Act may provide some form of relief.

According to the Federal Trade Commission:

A warranty is a promise, often made by a manufacturer, to stand behind its product or to fix certain defects or malfunctions over a period of time. The warranty pays for any covered repairs or part replacements during the warranty period.

If a car continues to have issues after multiple repair attempts, the dealership technically isn’t holding up its end of the bargain. You should seek legal representation, which is available free of charge.

The remedies available to consumers under the federal law are similar to those of state lemon laws. Kimmel & Silverman’s website, LemonLaw.com, says:

Remedy under state lemon laws and federal warranty laws could include a complete repurchase of the vehicle, including taxes, tags, finance charges, and down payment; an MSRP to MSRP swap; or significant monetary compensation to reflect the diminished value of the vehicle as a result of the defect plus continued ownership of the vehicle.

What to Do if You Have a Lemon on Your Hands

USA.gov recommends that you take these steps if you believe your vehicle fits the bill:

  • Give the dealer a list of the problems every time you bring it in for repairs.
  • Get and keep copies of the repair orders listing the problems, the work done, and the dates the car was in the shop.
  • Contact the manufacturer, as well as the dealer, to report the problem. Check your owner’s manual or the directory for the auto manufacturers.
  • Help other consumers avoid purchasing your lemon by registering it at safetyforum.com.

 Other helpful resources

Here are a few additional resources to help you understand lemon and federal warranty laws:

  • Autopedia
  • Better Business Bureau
  • The Center for Auto Safety

Once you’ve done your homework and presented your argument to the dealership, promptly seek legal counsel if the dealer refuses to take the problematic vehicle off your hands.

This post originally appeared on Money Talks News.

More from Money Talks News:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team