Lemon laws are synonymous with the car industry. Maybe you bought a car from the dealership, and it wasn’t until days later that you found a mechanical issue, a major cosmetic problem, or the vehicle simply doesn’t fit your lifestyle. What are your rights as a consumer?
Before we begin, from whom did you purchase the car? Was it a dealership, a used car lot, an auto auction, online, or a private individual? This answer determines what you’ll do next.
In this blog, we’ll explore your next steps.
Out of all the places you can buy a vehicle, a dealership is the easiest place to rectify a problem. Auto manufacturers cannot and do not own dealerships in the United States due to franchise laws in each state.
In the same way your local Taco Bell is a franchise, your local Ford dealership is a Ford franchise. Your local Ford dealership can sell new and used Ford vehicles and may opt to sell multiple Ford brands. So, if you buy a Ford from your local Ford dealership and have an issue, it’s best to resolve it with that dealership.
Start by going back and explaining the problem to your salesperson or a manager. Most dealerships want you to be happy — a happy customer returns to purchase another vehicle in the future. A happy customer has their vehicle serviced at the dealership. Dealerships want return customers for future car sales, not buyer’s remorse.
Dealerships make money when you finance and service that vehicle at the dealership. In fact, Edmunds.com relays information from the National Automobile Dealers Association, NADA, that 26% of a dealership's gross profit comes from selling new cars.
Used cars account for 25% of gross profits, and a whopping 49.6% of gross profits come from the service and parts department. Dealerships want you to return for future business. There’s no need to be mad or confrontational. Go in and explain the issue and see what they can do to resolve it.
If the problem with the vehicle is simply that the vehicle doesn’t fit your lifestyle, most dealerships will let you exchange the vehicle for another on their lot that suits you better. You’ll have to pay the difference in price (if any), but you won’t be stuck with a car that doesn’t serve you. You may also have to pay additional fees such as refinancing, taxes, and licensing.
Do you regret the purchase altogether? A common misconception is that there is a “Cooling Off Rule” that allows you to return a new vehicle. That however is not true. The Federal Trade Commission’s “Cooling Off Rule” states that if you purchase an item with a value of more than $25, you have three days to return and cancel the sale. There are exceptions to the rule with one being new vehicles.
However, in California there is a state law that will allow you to return a used vehicle of $40,000 or less in value if you purchase two day cancellation prior to signing the contract. There are conditions such as the vehicle must have the original paperwork, have no tickets or liens and be driven less than the miles in the two day cancellation contract. If these conditions are not met, the dealer doesn’t have to accept the return.
Federal law doesn’t require dealerships to accept a returned vehicle. There are some states that have laws in place requiring dealerships to accept a return after a cooling off period. Also in some states, dealerships can decide on their own to have a return policy. You’ll need to do some research to find out what rights you have in your state.
If you bought a certified pre-owned (CPO) vehicle from the dealership, then it’s time to dig out all the paperwork and warranty. You need to know what’s covered and what’s not.
It’s easy to miss the fine print when you’re in the heat of the moment, especially with the amount of paperwork that comes with buying a car. See if you can get the issue resolved by investigating what the dealership covers.
Don’t give up if your particular problem isn’t covered or listed. Again, go into the dealership with a smile on your face and a positive attitude. The dealership may just fix the problem or at least give you a discount on any work that needs to be done. You can catch more flies with sugar than vinegar!
Some CPO programs allow you to exchange the original vehicle you purchased for a different one. If the second vehicle is more expensive, you may be allowed to pay the difference. Check your paperwork.
If you bought an “as-is” vehicle from a dealership, you may be out of luck. The phrase “as-is” means exactly what you think it means: The vehicle has no warranty and the buyer must assume all risk. The dealership is not on the hook for any repairs or problems.
Didn’t get the outcome you wanted when you approached the dealership on an issue? Some states have lemon laws. You’ll need to search lemon laws in your state to see what you can do.
CarPro expert Jerry Reynolds has some advice when it comes to Lemon Laws:
Should you feel you have a Lemon Law case, your paperwork of repair attempts is very important, and not just having the paperwork in order, but also what it says. If the dealer is unable to reproduce the problem, that can hurt your case if it is written that way. Look at your repair order before you leave the dealership and make sure your issue was acknowledged. I often recommend people try a different dealership on the third attempt to repair a problem. Two dealers failing to make the repair will only strengthen your case.
All states have an attorney general’s office where you can file a complaint. Google your state government for contact information and how to proceed. There is also the federal Lemon Law Act. You can file a lawsuit if a dealership has been unable to repair your vehicle after a reasonable number of attempts. You could be entitled to a refund or replacement.
This process is a little more complicated than returning a car to the dealer. Hopefully you took the vehicle to an independent mechanic and had the car inspected.
Did you get a vehicle history report before buying? What about searching for recalls? Did you ask about the seller’s return policy and get it in writing? If so, you did your due diligence, and unfortunately, you just happened to get a bad vehicle.
If you did neither of these things, look through your paperwork. Did the vehicle come with a warranty? Did you buy it as-is? You’ll have options if the vehicle did come with a warranty.
Try going back to the used car lot to see if they’ll fix the problem. If you bought the vehicle as is outlined above, you don’t have much recourse other than to look at your state’s lemon laws if applicable or contact your state’s attorney general office. You can also look into the federal lemon law.
Your right to return a car from an auto auction varies with each company conducting the auction. You might be lucky if you bought from an auto auction with a money-back guarantee. Some auto auctions have a guarantee if the vehicle is found to have major mechanical issues within a certain amount of time or miles driven. Check your paperwork. Most auto auctions are as-is, so keep your expectations low.
Time to dig out the paperwork again. Some online dealers, such as CarMax, have a return policy. The stipulations to return a vehicle are outlined in the contract. The contract may also state that you have a certain amount of days or mileage in which you are eligible to return the vehicle.
Check your state laws. The state of California gives you two days or as stipulated in the original sales contract to return a vehicle purchased online.
You may have some recourse if the online dealer is not able to deliver the vehicle in 30 days. Check out the Federal Trade Commission Mail, Internet or Telephone Order law.
Generally, a vehicle bought from a private party is bought as-is. You can try to talk to the seller, but it’s up to them to cancel the sale. Lemon laws apply to retailers only. Another alternative is taking the individual to a small claims court in your state.
If you bought a car from a friend or relative, you might be able to talk to them about returning the car or at least splitting the cost of any major repairs that weren’t disclosed.
No one buys a car with the idea of returning it right away. Forewarned is forearmed. Ask upfront before you buy what the return policy is. Read all the documents that come with the sale.
Try working with the dealership to resolve the problem before you go the pricey route of hiring a lawyer. Laws regarding vehicle returns vary greatly state to state. Always do your homework and research before purchasing any vehicle.
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