What is the California lemon law repurchase formula?

If you purchased or leased a vehicle only to discover that it has a chronic defect, you’re not necessarily out of luck. You may have a legal remedy. You can file a lemon law claim, and if successful, one option is to require the manufacturer to buy back the clunker. How is the dollar amount determined? Your payout will be calculated based on the California lemon law repurchase formula.

How Much Can I Get for My Lemon?

The California lemon law repurchase formula can help you calculate your compensation.

When you successfully prove you have a lemon, California statutes lay out a lemon law repurchase formula that a manufacturer must follow when buying back your vehicle. The automaker or dealer must refund the following to you:

• Down payment
• License and registration fees
• Sales tax
• Monthly payments made
• Collateral costs incurred (taxi, Uber, tow truck, etc.)
• Rental car costs

If you purchased the vehicle with a loan from a bank or lending institution, the manufacturer must pay off the balance of the loan directly to the bank. The manufacturer is also required to pay your legal fees if you hired an attorney to represent you in a lemon law claim.

If the sales tax, license, or registration fees were prorated into your monthly car payments, then you’ll be reimbursed only for what you’ve paid so far. The dealer must also reimburse you for any expenses and costs you incurred while your car was being repaired for a lemon law claim, such as rental transportation or lodging if you’re stranded. The dealer must also pay any prepayment penalties, finance charges, or termination charges you incurred or will incur as a result of selling the car back to the manufacturer. The dealer is not required to reimburse you for any optional upgrades, such as an aftermarket spoiler or stereo you installed in the car.

The manufacturer or dealer is legally allowed to deduct a “mileage offset” based on the number of miles you’ve already driven in the defective vehicle. The mileage offset formula includes:

(Cash price of vehicle) MULTIPLIED BY (# of miles when you first presented the car/truck/SUV for repair) DIVIDED by 120,000 miles.

For example, if the price on the sales contract for your vehicle is $50,000, and you first brought the vehicle to an authorized dealership for repair of the defect when the odometer read 15,000 miles, then the mileage deduction would be $6,250.

($50,000 MULTIPLIED BY 15,000 miles) DIVIDED BY 120,000 miles = $6,250.

Always double-check the mileage figure used by the dealer. Some dealers may use a later mileage (after multiple repair attempts) as the basis for their calculations, rather than the mileage from the date you first presented the problem. An error with the mileage deduction reduces the amount of money you will receive under the California lemon law repurchase formula.

California Lemon Law Repurchase Formula for Leased Vehicles

If you leased your vehicle rather than purchased it, the process is somewhat different. The California lemon law does not outline a specific formula for the buyback or repurchase of a leased vehicle, but the California Arbitration Review Program suggests the following:

The lessor shall receive the pay-off amount due under the lease, less the lessor’s security deposit and refund lessor would receive for an unexpired service contract.

The lessee is reimbursed for fees (sales tax, registration, license), incidental damages (i.e., rental car and towing costs you incurred as well as penalties or early termination charges), any base monthly payments you’ve made up until the time of repurchase, the value of your deposit or trade-in amount, and the value of your security deposit. The same mileage deduction formula explained above applies to leased vehicles.

Can I Get a Replacement Vehicle Instead of a Buyback?

The lemon law repurchase formula in CA is not your only option.

Yes, if you don’t want the repurchase (buyback) option as a remedy for your successful lemon law claim, you can request a replacement vehicle from the manufacturer. Under the replacement option, the manufacturer will take possession of the defective vehicle and provide you with another vehicle of similar make and model. Some consumers prefer this option.

If you purchased a defective car or truck and feel frustrated and overwhelmed, a skilled and experienced lemon law attorney can assess your situation and explain your legal options. For a free consultation, call Neale & Fhima at 877-308-2128.

Contact Successful Attorneys

The Song-Beverly Consumer Warranty Act

California’s powerful lemon law is designed to protect consumers. Also known as the Song-Beverly Consumer Warranty Act, the lemon law states that if you purchase a defective vehicle, you are legally entitled to a refund, or the vehicle can be replaced at the manufacturer’s expense. The California lemon law repurchase formula is used to calculate how much the manufacturer will pay you in the buyback.

But first, you must prove that your vehicle is a lemon according to legal guidelines. It’s not enough to simply provide anecdotal evidence by saying your car breaks down all the time. To qualify for lemon law protection, you must show that a “reasonable person” would agree that the defect “substantially impairs” your vehicle’s …

• Use,
• Value, or
• Safety.

“Use” generally refers to how often and why you use your vehicle. For example, substantially impaired use could be something like your car’s leaky fuel system means it’s not reliable enough to drive on long family vacations for fear of being stranded because you ran out of gas. An example of compromised “value” could be a defective paint job that will reduce the resale value of your car or truck and, therefore, diminish your financial investment. And an example of a vehicle with compromised “safety” could be one with anti-lock brake or seat belt problems that could spell disaster in a collision. A vehicle with impaired safety doesn’t mean you’re in imminent danger – it simply means that under certain circumstances, the defect could potentially be harmful to you.

Next, you must demonstrate that you made a reasonable number of attempts to get the defect repaired by an authorized dealer. Remember, to qualify for lemon law protection, you must have your car fixed by an authorized service provider – not just a neighborhood mechanic, your brother-in-law, or yourself. The number or repair attempts required by law can vary – sometimes two, sometimes four or more – but the general idea is that you made a good-faith effort to get the vehicle fixed, to no avail. A skilled and experienced California lemon law attorney can advise you about the number of repair attempts required in your particular situation. Be sure to save all receipts, work orders, spare parts, and other documentation from each repair attempt because these will support your legal claim.

Once your attorney files a claim and proven your case, you have two remedies to choose from:

1. Repurchase
The manufacturer will take possession of the vehicle and issue you a refund of the purchase price based on the California lemon law repurchase formula.

2. Replacement
The manufacturer will take possession of the vehicle and provide you with a new one. It must be an identical or substantially similar vehicle. The manufacturer will pay the registration and taxes on the new vehicle, but you will not receive a refund of fees or finance charges paid on the original vehicle. This option requires the consent of both parties.

In some circumstances, we may be able to negotiate an additional option called a “cash and keep.” This would allow you to retain possession of the vehicle and receive a cash payment to compensate for the defect.

Lemon Law Statute of Limitations

The statute of limitations for filing a lemon law claim in California is four (4) years from the date a consumer knew or should have known that the vehicle was a lemon. This does not mean that if you have had your vehicle for more than 4 years, you cannot bring a lemon law claim. Our attorneys at Neale & Fhima have successfully “lemoned” vehicles that are over 10 years old. If you have purchased or leased a lemon, you’ll want to start the buyback process as soon as possible. After the statute of limitations has passed, a judge may dismiss your case, but don’t hesitate to contact our team if you have questions about the statute of limitations. Collect copies of your repair bills, work orders, and receipts and call a skilled lemon law lawyer today.

Call Neale & Fhima Today

If you’ve purchased a chronically defective car, truck, or SUV and are at your wit’s end, give Neale & Fhima a call. We can file a legal claim on your behalf and help you calculate the amount you’re entitled to under the California lemon law repurchase formula. You don’t have to stay stuck and aggravated, spending all your time in the repair shop. Whether you choose a buyback or a replacement vehicle, we can help you find a solution. To find out more about how we can help, call us for a free consultation at 877-308-2128.

Attorney Aaron Fhima

Attorney Aaron Fhima is a trial attorney who has secured numerous settlements and verdicts against large corporations and some of the largest auto manufacturers in the world. Representing consumers and injury victims throughout the state of California, Aaron’s practice areas include personal injury, and lemon law litigation. Aaron has a long record of success taking on large defense firms; and he doesn’t hesitate to take cases to trial when necessary to enforce his clients’ rights.