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What You Need to Know About “Used-Car Lemon Laws?”

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by , Guest Blogger

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Introduction to Lemon Laws

“Lemon laws” are legal standards that protect new car buyers. It means that consumers have the right to buy a car that is in full working condition and reliable. Generally speaking, they provide remedy for purchasers of consumer goods in order to compensate for failing to meet standards of quality and performance. Adhering to such standards tends to be easier with regards to buying a new car however, too often used-car buyers to have the misfortune of being stuck with an unreliable vehicle, or forced into repairs that cost more than the car.

Owners of “lemons,” which is the term for vehicles with performance/quality issues, end up making car payments even while their vehicle sits idle. There are often clauses in contracts for the sales of used vehicles designed to protect dealers from the risk of lawsuit regarding these cars. Buyers might need to prove that the issues regarding the vehicle were pre-existing conditions that existed prior to purchase in order to receive the compensation afforded by lemon laws. All of these factor into complicating the matter of used car “lemons” and it is important for buyers and potential buyers to educate themselves to avoid inconveniences.

In general, cars that are “lemons” are dangerous to drive and worse, they carry a high risk of becoming inoperable, essentially a liability to the owner as opposed to an asset. In worse case-scenarios, some used-car lemons may have been sold fraudulently due to some dealers not disclosing vehicle history, misrepresenting it or tampering with it (often the odometer). The lower-income segments of buyers face the most risk with this.

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Dealing with Used-Car Lemon Laws

Used-car problems affecting consumers is fairly common, leading some state legislatures to actually pass laws. As of the time of this writing, only six states have made these laws official: Connecticut, Massachusetts, Minnesota, New Jersey, New Mexico and New York. These states have used-car lemon laws that work by providing statutory used-car warranty. He laws are directly related to the age or mileage of the vehicle. If the vehicle exhibits problems during the warranty period, the dealer gets a chance to repair them. If those fixes don't work after several tries, the dealer usually must either replace the car or refund the buyer's money. That’s the typical way that these state laws work. Other states may not have these laws on the books but they do have some other form of used-car buyers' rights, requiring used-car warranties or setting minimum standards for the sale of used cars. States such as Arizona, Illinois, Maine, Nevada, New Mexico and Pennsylvania handles cases of lemons this way but only states with official lemon laws make it a requirement for the dealer to provide a replacement or refund for the car. The other states rely on state regulation that fits within general federal lemon laws. For example, in California there is a new law requires “buy-here, pay-here” dealerships (used-car businesses that specialize in older, high-mileage vehicles for consumers who can't qualify for conventional car loans) to issue 30-day/1,000-mile warranties for the used vehicles they lease or sell. The existence of that warranty also their customers’ additional protection under the federal lemon law, known as the Magnuson-Moss Warranty Act.

The State of Used-Car Regulations

Most states using existing lemon laws which are very limiting. The number of days the car is covered and the allowable mileage are all restricted. For example, Arizona law covers a used car only if a major component breaks within 15 days or 500 miles of its purchase — whichever comes first. For new cars, though, those terms extend to two years or 24,000 miles. Consumers should be aware that when buying a car, the only way to fully protect themselves is knowledge. There are many any consumer advocacy sites, such as The Center for Auto Safety, that discuss new car lemon laws in detail, but obtaining information on used-car laws is more difficult. The site Car Lemon (an attorney referral site) and Autopedia's Lemon Law Information Page both have the broadest information on states' used-vehicle lemon laws.

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What if Your State Doesn't Have a Used-Car Lemon Law?

Consumers who don't live in a state with a used-car lemon law, or whose state laws don't cover their individual situations, there are federal laws, though limited, do help:

  • The Uniform Commercial Code (UCC): a used-car sale automatically includes an implied warranty that the car is fit for transportation. Used-car dealers may "disclaim," the implied warranty if they sell the vehicle "as is." Some states that prohibit dealers from disclaiming the implied warranty (such as the District of Columbia, Maryland, Massachusetts and West Virginia), the UCC can be more effective than a used-car lemon law would be.
  • The Federal Trade Commission's Used Car Rule: The Federal Trade Commission (FTC) requires dealers who sell five or more cars per year to post a Buyers Guide in every used car that's offered for sale. The guide has to show whether the vehicle is being sold "as is" or with a used-car warranty and it must detail what percentage (if any) of repair costs is covered by the dealer under the warranty. This law is notable for requiring a list of the major defects that can occur on the used vehicles in question.
  • Magnuson-Moss Warranty Act (a.k.a. federal lemon law): This law prohibits the disclaimer of an implied warranty when a car is sold with an express written warranty.

How to Use Lemon Laws

First, you must determine if you truly have a lemon in order to build a solid argument and/or make a claim:

  • Run vehicle history reports from Autocheck and Carfax. There’s even the federal government's National Motor Vehicle Title Information System, but that can only be obtained through various vehicle-history vendors at a low cost. All of the listed reports could potentially expose many of the hidden problems associated with used cars, such as prior accidents and branded titles. If a buyer were to run all three reports, it would benefit them. Do dote that U.S. states do not require insurance companies to report when they fix a vehicle, although Canada does.
  • Do not rely on reports alone. It is generally recommended that you take the car to a qualified mechanic and a body shop that can spot signs of structural damage. Make sure they put it up on a lift. As with vehicle history reports, this is best done before the vehicle purchase, but if you're trying to press your rights under state or federal lemon laws, it's critical to determine the source of the vehicle's problem.
  • Document the vehicle's service history and retain all work orders and receipts. Download or print a vehicle repair log if possible.
  • If the dealer still won't assist in providing in any of the above, or if you suspect fraud, send a complaint in writing to the vehicle's manufacturer and your state's attorney general's office or department of consumer protection. The federal government's Consumer Action Web site provides detailed information on how and where to file complaints (including sample letters), dispute resolution services, small claims court and more.

Taking Action

Legal action is a long process and should only be seen as a last resort. Many times, a small claims court will be able to handle everything. Should you choose, attorneys specializing in Lemon Laws can determine whether you've got a serious case before any action is actually taken. Recommended legal recourse only tends to happen when safety is an issue, and an attorney can shepherd you through the legal process. Lemon lawyers don't charge client fees, usually collect instead from the defendant. You can find lemon law specialists in your state through the National Association of Consumer Advocates. Free legal aid to low-income individuals is available through the nonprofit Legal Services Corporation and National Legal Aid and Defender Association.

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