How Lemon Law Buyback Calculation Works in California

If you have found yourself with a lemon on your hands, you are likely doing all you can to make the manufacturer take it back and refund you the money you spent. According to the Song-Beverly Consumer Warranty Act, a state law that identifies the rights of California consumers, once it has been determined that the car you’ve been sold qualifies as a lemon, it is the obligation of the manufacturer to provide you with a refund. However, many consumers are caught off guard when they realize that the amount of the refund relies on several factors and may not equal the total you originally paid for the vehicle in the first place.

What the Manufacturer Owes You

The manufacturer must follow strict guidelines for refunding a consumer who has purchased a lemon from them. California state law compels the manufacturer to provide a refund to you for the following costs:

  • The down-payment you made
  • Any monthly payments you’ve made
  • Reasonable rental car expenses incurred
  • License and registration fees
  • Sales tax
  • Incidental costs, such as taxi fare, towing costs and out of pocket repairs

As the consumer, is important to remember that any lost wages you incurred because of the lemon and any costs associated with the emotional stress you suffered are not included in the manufacturer’s refund.

Understanding Mileage Offset Deduction

Before the manufacturer calculates the refund total, it is their right to deduct a mileage offset that will likely lower the final refund amount you receive. The formula for calculating the mileage offset is as follows:

(Cash price of vehicle) x (total miles driven from purchase up through the first repair attempt) / 120,000 miles

For instance, if you purchased the car for $40,000 and you first took the car in to the dealership to repair the defect at 7,500 miles, then the mileage deduction would be $2,500.

Calculating Other Costs

If you have a remaining loan, the manufacturer must cover it by making the payment directly to your lending institution. If the car was purchased in cash, you will receive the total amount you paid, minus the milage offset. Furthermore, if you worked with an attorney, the manufacturer must cover any attorneys’ fees as well.

If you have been sold a lemon and you need help receiving the refund you are owed, reach out to Lemon Law Partners, LLP today. We offer free case evaluations to our clients in the Bay Area and throughout California, so call (800) 887-9362 to get started.