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Don’t want a lemon law buyback? You have other options.

Oct 15, 2022

The traditional lemon law remedies of buyback or vehicle replacement are not as valuable in the current auto market. A cash and keep settlement is a great alternative.

Lemon laws are state laws that allow consumers to bring a legal claim against a vehicle manufacturer when the car, SUV, truck, or other vehicle that they recently bought is defective. Lemon laws typically make the auto manufacturer replace the defective vehicle with a comparable vehicle or refund the owner the amount that they paid for the vehicle. But in the current market, with low vehicle inventories, delivery delays, and little negotiation around sticker prices, it may be difficult to get another vehicle. A good lemon lawyer will negotiate other options for their clients. Many of our clients at Timothy Abeel & Associates are turning to the cash and keep settlement to get fairly compensated for their lemon vehicle.

What are the standard legal remedies?

Lemon laws are slightly different in each state, and your lemon lawyer can advise you on the exact laws where you are. However, most states provide two options for owners of a lemon vehicle, which are not complicated. In fact, they are similar to the options you would have if you returned any day-to-day goods:

  1. Replacement. The owner returns their defective vehicle to the manufacturer and the auto manufacturer provides a comparable replacement vehicle. It should not be a different or cheaper model or trim or have less features than the original vehicle e.g if your new Chevy Equinox Premier is defective, the automaker can’t replace it with an Equinox LS. If you financed your vehicle or are leasing it, your loan or lease will typically continue as if no replacement had been made. You will be given credit for your payments and the term of your loan or lease will not be extended.
  2. Refund/Buyback. You give back your problem vehicle and the automaker reimburses you the amount that you paid for it, including sales tax. Usually, the refund amount is not the full price that you paid for the vehicle because the refund is reduced by an amount for your use of the vehicle. Also, the refund is how much you paid for the vehicle, not how much it would cost you to go out and buy that vehicle now.

In both scenarios, the automaker must also pay your attorney fees and court costs. This is written into the law. You can find out more about lemon law remedies here.

What’s the problem with buyback in a low inventory market?

A replacement vehicle or full refund sound like great options when you are stuck with a problem vehicle. At last, the trips to the repair shop will be over, someone else pays your legal fees, and you should be left happy with a new, fully functional vehicle.

At the minute, though, that is not the reality. As a result of the semiconductor chip shortage, supply chain difficulties that started in the COVID-19 pandemic, and general mayhem in the auto industry, it is currently very difficult to buy a vehicle. It is hard to find the car, truck, or SUV you want in stock, deliveries can take months, and vehicle prices have been pushed up because of the continuing demand and lack of supply. Even used car prices have been affected as people opt for a used car when they can’t get the new car they want at a good price, or at all.

If you want a replacement vehicle from the manufacturer, you may be out of luck. Most manufacturers are not even offering replacements because of the lack of inventory, and in the rare event that they do, owners are reporting wait times of 9 months or more. In the meantime, you have no vehicle. If you choose a refund for your defective vehicle, you will probably get less for your money when you go out to buy another vehicle because vehicle prices across the country have increased, and dealers are not willing to negotiate around sticker price. You may not even be able to find the vehicle that you want.

Many of our clients simply do not want the traditional lemon law remedies in the current market, and they are looking for better alternatives, such as a cash and keep settlement.

What is a cash and keep settlement?

A cash and keep settlement is negotiated between a problem vehicle owner (or rather, their attorney) and an automaker. They agree that the owner will keep their vehicle, but the manufacturer will pay the owner a cash sum to cover the loss in the value of the vehicle as a result of the defect. We have helped clients to recover amounts ranging from $2,000 to $20,000, as well as keeping their vehicle, as part of a cash and keep settlement, depending on the original purchase price and the repair history.

When you agree a cash and keep settlement, your title and warranty are not affected and what you do with the vehicle is up to you. You can keep it or you can trade it in. You can wait until your new dream vehicle is finally delivered and then trade it in. You can decorate it with lemons if you want. It’s up to you. And the cash payment is not taxable.

At Timothy Abeel & Associates, we have been helping owners of lemon vehicles get the remedy that they want, whether that is a replacement vehicle, buyback, cash and keep, or other settlement for years. If you want to know more, contact one of our experienced lemon law team online or by calling 888-611-5481 to discuss your problem vehicle.

Experiencing Similar Issues?

If your car was manufactured between 2018 and 2023 we may be able to help. Contact us for more information.