How Your Car Loan Is Affected If You Bought a Lemon

A "lemon" car is a new or used vehicle that develops a significant problem after purchase or lease. If the dealer can't repair it, laws allow you to exchange the car for a new one or get a refund. Lemon cars sometimes re-enter the market with "lemon titles" at heavily reduced prices. For informed buyers who are willing to take a risk, these vehicles can occasionally be a smart buy. Here's what you need to know about lemon cars.

Understanding Lemon Law

Lemon law protections extend to financed cars, although many borrowers are unaware of how filing a lemon law claim impacts their loan responsibilities. Manufacturers are legally obliged to buy back or replace vehicles if the following conditions are met:

• The manufacturer has made several reasonable attempts to repair the vehicle;
• The issue is covered by the manufacturer’s warranty; and
• The issue was not caused by unreasonable or unauthorized use after the sale.

If the manufacturer cannot repair the lemon, they must either replace the car or refund the consumer for the defective vehicle. Contact a Florida lemon law lawyer to learn more about your legal rights and options.

Loan Responsibilities During a Lemon Law Claim

If your financed car qualifies under Florida's lemon law, you must continue making loan payments throughout the claim process, which generally takes two to six months. Contrary to popular belief, filing a lemon law claim does not pause your loan obligations. While it may be frustrating to make payments for a defective vehicle that you cannot drive, failing to meet your loan obligations can lead to negative consequences such as:

• A damaged credit score
• Vehicle repossession
• Loss of rights under the lemon law

You should inform your lender that you are filing a lemon law claim. Ask how this might impact your loan obligations and discuss the possibility of receiving a replacement vehicle during the process.

If your vehicle is determined to be a lemon, the manufacturer must either replace the vehicle or provide a buyback. The manufacturer must legally reimburse you for all reasonable costs incurred during the lemon law claim, including your car payments.

Replacement

If you opt for the manufacturer to replace your vehicle, the new car will be identical or equivalent to the one being replaced. You may also receive compensation for reasonable incidental expenses.

Regarding your loan, it's crucial to understand how your lender will address any agreement on the new vehicle. If you bought the lemon car with special discounts or financing offers, the manufacturer may not be obligated to provide these same deals for the replacement vehicle.

You Still Need to Settle the Loan

Defaulting on a loan due to car defects can severely impact your credit score. Additionally, the vehicle may be repossessed, preventing you from making any claims. Address any lemon car claim concerns with your lender, as special procedures might apply.

You'll only be entitled to the car’s fair market value if you receive a refund. It will cover the loan amount you borrowed to purchase it. If the car’s value exceeds the loan amount, you will still need to pay the remaining balance to the lender.

Endnote

No one should have to continually repair a car that was defective from the beginning, and no one should compromise their safety by driving it. Document all repairs, be aware of your rights and obligations, and collaborate with your lender and manufacturer to find an acceptable resolution.