You are in need of a new car, and you start shopping. You make your way onto a lot, and you find the perfect option for you. Everything falls into place, the payment fits into your budget, you love the color, the style is what you are looking for. Everything seems good to go. You get the keys and drive off. A few days later things start to go array with your new vehicle. You are wondering if you purchased a lemon. You now have a car payment for a car that is virtually undrivable or will take tens of thousands of dollars to repair.
Now you are left dumbfounded, trying to figure out what your next course of action is. What do you do? Where do you go? You now have a car payment for a car that is virtually undrivable or will take tens of thousands of dollars to repair. That is more than what you bargained for. In this article we will dive into and explore XYZ things you can do if you are in this situation. You have options!
According to CARFAX, a lemon is when a car has a substantial defect that the automaker is unable to fix within a reasonable amount of time. Furthermore, the definition of substantial defect and reasonable amount of time varies from state to state. All states have lemon laws for brand new cars. Kelly Blue Book does an excellent job on breaking down the lemon laws for all 50 states. However, only 7 states have legislation that protects you in the instance of purchasing a used car that turns out to be a lemon. Those states are Connecticut, California, Massachusetts, Minnesota, New Jersey, New Mexico, and New York. Even though there are laws pertaining to used vehicles classified as lemons it may be unlikely that they will be enforced.
The federal government also has their own version of a lemon law. The official name is the Magnuson Moss Warranty Federal Trade Commission Improvements Act. This can be found in Title 15 Chapter 50 of the U.S. Code in Sections 2301-2312. This applies to used cars that either come with an extended manufacturer warranty or a purchased extended warranty. In layman's terms, it means that if the manufacturer cannot amend the problem you are entitled to either a full refund or replacement.
There are many ways to protect yourself from purchasing a lemon. Here are 10 pretty easy ways to check if a car could be reliable or if it is a dud:
You should consult with a local attorney who specializes in lemon law, to ensure that you have a case. Follow their guidance. It is easier to get lemon laws enforced on new cars than older, used cars. You will want to make sure that you have detailed documentation of all interactions with the dealership, manufacturer and any person who has been in involved with any repairs.
It could be a lengthy process; you may be better off trying to cut your losses and move on and get another vehicle. That could look quite different if you paid cash or financed your vehicle when you purchased it. If you purchased with cash, you may be able to recoup some of your investment by selling the vehicle as-is or selling it to a junk yard for scrap.
Okay, what should you do if you financed your vehicle, and it ended up being a lemon or too expensive to repair? You have a few options. Contact your lender and tell them the situation. They may be able to help you work out a solution. Depending on the amount of negative equity you have in the vehicle and your credit score; you may be able to wrap up the balance owed on damaged vehicle into a new car loan. Only if the new car has enough equity after taxes and extra fees are paid. If you choose to go this route you may have a higher interest rate or may be required to supply a higher down payment to secure the loan.
Often times, this is not an option for many people. You can call your lender and tell them that you would like to turn the vehicle over to them. This is called a voluntary surrender. This can have negative credit implications, but it would allow you to get rid of the car. Keep in mind, you may still have a balance owed on the vehicle after they sell the vehicle at auction. This amount you can either set up a payment arrangement with them, discharge it in chapter 7 or chapter 13 bankruptcy, or attempt to settle the balance for less. Use our free bankruptcy calculator below to help you figure out if that is a good option for you.
Whatever you decide to do, you can contact us for a free evaluation of your situation and get you on back on the right track.