top of page

Lemon Law (1,000 Words)

You bought a shiny new car and drove it off the lot, only for the brakes to fail a week later. There's no doubt about it: you just found yourself with a lemon. But what now?

Luckily, lemon laws have been enacted to help people in your exact situation. Keep reading to find out exactly what a lemon law is, what you need to do in preparation for events like arbitration, and what you can expect during the actual proceedings.

What is Lemon Law?

To help protect customers, every state has some version of laws in the event of a lemon. Cars are classified as lemons when they are newly purchased but demonstrate repeated problems that aren't fixed after a reasonable number of repairs.

Your car's problems usually have to impact the car's safety or function in some way, even though some people have cited lemon law for things like bad paint jobs or smells. The defect cannot be the result of personal abuse after purchasing the car.

The number of repair attempts that are considered reasonable depends on your car's defect.

If it's a substantial problem that impairs brakes or steering, it has to be remedied within one visit to the auto shop before it's considered a lemon. If it isn't a serious safety issue the defect must be fixed within three or four visits, though that number varies by state. In addition, your vehicle can be classified as a lemon if it's in the shop for a certain number of days to fix one or more substantial defects that should be covered by the warranty.

Even though every state has some version of a lemon law, they usually only apply to new cars that were recently purchased. In addition, some states like New Jersey don't include cars that were purchased under a certain dollar amount.

If your car fits these requirements and the specific regulations of your state, you might be eligible for either a refund or replacement of your vehicle.

Prepping for Arbitration

Usually, dealerships would rather settle out of court than going through arbitration. The process of settlement is entirely voluntary, however, and if your case is eligible you can move forward to arbitration at any point.

The Better Business Bureau runs a free dispute resolution program to help you be your best advocate during the process. 1 800 lemonlaw is another service dedicated to helping people prepare for their arbitration proceedings.

In general, people with more documentation do better in proceedings than those who do not.

When you are getting ready to proceed with your case, you'll want to collect any advertisements or brochures about your vehicle. The manufacturer will likely have to uphold any claims they made in their advertisements.

You'll also want to make sure that you have all of your vehicle's service records that show how often you took the car into auto shops as well as any other documents that show your attempts to get the dealer to fix the car.

If you can, try to use a state consumer protection agency program rather than the manufacturer's in-house or private arbitration programs. These other organizations have more to gain from you deciding to settle or abandon the case than an independent organization.

During the Arbitration Process

How you proceed during the arbitration depends on which venue you decide to approach. You can either pursue repurchasing or replacement to remedy the purchase of your lemon.


If you choose to have your car repurchased, you might be able to get more money beyond just the purchase price of the car. Things like sales and use taxes, registration and title fees, and insurance costs while the car was out of service and in the auto shop can all be added to the repurchase cost.

The amount you are eligible for varies by state, so be sure that you are getting as much as you can to make up for your lemon.

Auto manufacturers will generally pay the balance directly to your lender if you took out an auto loan. Keep in mind that it's possible if you took out a large loan and the car had a high number of miles on it when it was repurchased that you might still have a loan to pay off after the balance is paid. This is because the use offset is calculated in the repayment before the loan balance is paid, so you might still be stuck with a monthly bill on a loan.


Let's say you like the car in general but you think you just landed the bad car of the bunch. In this case, you can ask for a replacement car. The new vehicle will be either identical or as close as possible to the car that it's replacing with similar features.

In addition to the replacement, you can also be compensated for incidental expenses. If you bought the car with special discounts or financing deals, however, the manufacturer is not required to offer them to you for the replacement car. As a result, your replacement car might still end up costing you more than the original price of the lemon.

No matter what, keep in mind that if you took out an auto loan you need to keep paying it off during the arbitration process. If you don't, your car could be repossessed. This would cause you to lose any rights that you have under your state's lemon law.

If you took out a loan to afford your car, contact your lender early on in the process to let them know what's going on. They will be able to give you an idea of what will happen to your loan if you choose repurchasing or replacement as your lemon solution.

Making Lemonade out of Lemons

No one wants to deal with a lemon or the hassle of arbitration, but it's important to remember that you have certain rights under your state's lemon law. Knowing what constitutes a lemon in your state can help keep you protected.

Now you'll know exactly what you need to hold on to and how to proceed if your new car turns into a lemon. Keep browsing our blog to learn even more about this topic.


bottom of page