Buybacks are the most common outcome of a successful lemon law case. A buyback occurs when the manufacturer “buys” the car “back” from the consumer and reimburses them for all vehicle costs except for the mileage offset.
Although many buybacks may appear to be a success, you should be wary of unfair buy-back practices that benefit the manufacturer.
Unfair buyback practices you should avoid
Negative equity or “upside down” car loans are the most common unfair buyback practices. Negative equity occurs when the consumer still owes more money for a new vehicle after trading in the lemon.
For example, say you still owe $20,000 on a vehicle. You trade in that vehicle for a lemon worth $15,000. Even though you may receive a full refund for the faulty vehicle, you still have a negative equity of $5,000. Manufacturers generally refuse to pay back consumers for any negative equity, leaving them in debt for a car they longer have.
It is also common for manufacturers to exploit consumers through unfair mileage offsets. In California, the manufacturer must provide a full refund of all official costs and lemon-related costs associated with the vehicle. However, manufacturers are legally allowed to deduct an amount to cover the use the consumer got from the vehicle before it was deemed a lemon, otherwise known as the mileage offset.
How are mileage offset costs calculated?
California has a set formula to determine mileage offset costs. The number of miles driven on the vehicle from the purchase to the first repair visit is divided by 120,000 (the number of miles deemed to be the average lifespan of any vehicle). That number is then multiplied by the amount originally paid by the consumer.
Say you bought a vehicle for $30,000 and drove it for 6,000 miles before the first repair. Here is how the mileage offset cost would be determined:
.05 x 30,000= 1,500
The manufacturer should deduct only $1,500 from the buyback cost. In many cases, however, manufacturers will overestimate the amount of miles driven and present an unfair mileage offset cost.
You should always avoid manufacturer arbitration. Automakers may promise a quicker way to settle a lemon law dispute out of court, but they personally hire arbitration firms to protect their own interests. You can still take the manufacturer to court despite the outcome of the arbitration, but the arbitrator’s decision can now legally be held against them.
Although they are uncommon, you should also be wary of unlawful release forms. You should know that there is no legal requirement to sign any type of release form from the manufacturer. Automakers can hide fine print that go against the your interest.
How do I get a fair lemon law buy back offer?
Winning a your lemon law case should feel like a great triumph. You should not have to worry about receiving an unfair offer. The expert lemon law attorneys at Quill & Arrow LLP can make sure that you receive a fair buyback offer. Our lemon law attorneys have years of automotive expertise and success against large manufacturers – including Chrysler, General Motors, Mercedes-Benz, Ford Motor Company. Please call us today to learn about how the lemon law attorneys at Quill & Arrow can assist you – at no charge: (310) 933-4271.