Lemon Laws

by Gary Foreman

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Dear Dollar Stretcher,
Is there a "lemon law" where you can only have so many repairs a year? I heard that if you had your car fixed for the same thing three or more times they had to replace it or make some other agreed upon restitution.

While new car quality has gone up in the last twenty years, occasionally you'll still hear of a car leaving the factory that's just never quite 'right'. And that's why all 50 states have created their own 'lemon laws'. It's your chance as a consumer to get corrective action if needed.

Basically a 'lemon law' requires a manufacturer to repair a defective vehicle. If they are unable to repair it, the car owner can return the vehicle. His purchase price will be refunded minus a reasonable amount for use of the car.

Most states have similar requirements to demonstrate that you have a lemon. TP is right. Generally, you'll need to have made three or four unsuccessful attempts to have the defect fixed. If the problem is safety related or life threatening many states only give the manufacturer one shot at getting it right.

The repair attempts must take place within the first year or two of purchasing the car. There will also be a mileage limit. Usually between 12,000 and 24,000 miles. If your car isn't available for use for an extended period of time, it might be a lemon. Generally a car that spends more than 30 days in the shop will qualify.

The laws are written for new car buyers. About half of the states also include leased cars in their lemon law.

How do you find out what your state requires? You'll need to contact the Attorney General or Consumer Affairs office. Your phone book will have a listing of state offices. There may be a state 'information' number you can call. If all else fails, contact your local state representative. They should have a directory.

Remember, a 'defect' must substantially impair the use, value or safety of the car. A loose speaker wire on your premium sound system may be frustrating, but it won't qualify. On the other hand, if your car won't start, stop or steer whenever you ask it to, your car is running for lemon status.

As with all new car repairs, begin with your auto warranty. It may specify that you follow a specific procedure. Follow their guidelines even if your state doesn't require it. Usually it's not hard to do what's requested. You may be asked to send a certified letter or call a specific office to register your complaint. It's much easier to do that now than to debate whether you've given the manufacturer fair notification later. Who knows? You might even find that the additional pressure actually gets the car fixed properly.

Make sure that all attempts to repair the defect are made by factory authorized mechanics. Each time you take the car in you should receive a repair order that specifies what the problem is, when you dropped the car off and picked it up and the mileage at that time. If any of the info is missing add it immediately yourself.

When you bring your car in for a second time the dealer may try to just add it on to the original repair order. Ask them to open a new repair order. If they refuse, make sure to note on the order when the car went in and how long it stayed the second time.

It's also a good idea to note the odometer reading when you dropped the car off and when you picked it up. If they're nearly the same you have evidence that the car was not given a test drive.

Keep track of all of your contacts with the dealer and manufacturer. Who you spoke with, the date and what was promised. The record will be valuable if you actually need to pursue a legal remedy. Any written communications should be sent by express service or certified mail so you can prove that the letter was delivered.

Check your state law before you hire an attorney to represent you in this matter. About half the states will not allow you to collect attorney's fees even if you win.

Remember that the dealer is only acting on behalf of the manufacturer. Your disagreement is with the manufacturer, not the local dealer. In fact, if there's more than one dealer in your area, you might be asked to take the car to another dealer for repair. That could be enough to get it done right.

Just because your car has been in the shop for the specified number of days doesn't mean that you'll automatically get a new car. The dealer has the opportunity to prove that no problem exists, that they haven't been given a sufficient opportunity to repair the car or that the defect isn't big enough to harm the car's reliability, safety or value.

On the other hand, your car might not have been in for repairs the specified number of times or days. But if you can show that it cannot be repaired then you may still qualify for lemon law relief.

If you win, you won't just be handed the keys to a new car. You can expect to pay for the period of time you've used the car. Typically the formula is based on the number of miles that you've put on the car. If you've driven 10,000 miles you'll probably pay about 10% of the car's purchase price for 'reasonable use'. You may be able to have the mileage calculated based on what was on the odometer when you first brought the car in for repair. That mileage could be considerably less than what it is today. And that could save you hundreds of dollars.

There are other laws that could be helpful. But as a general rule, you'll find that the lemon laws are your best avenue to correct a problem with a new car.

We hope that TP's problem has already been resolved and that he's enjoying that new car.

Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.

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