Man doing a Lemon law buyback calculation

California Lemon Law Buyback Calculation

What Will I Get if My Vehicle is Bought Back Under California Lemon Law

California lemon law states that a manufacturer is required to repurchase or replace a vehicle if it fails to repair it according to its warranty within a reasonable number of repair attempts. While the reasonable number of repair attempts varies from case to case, the amount of refund that the customer receives is strictly regulated by law and by the lemon law buyback formula. This formula is often referred to lemon law mileage offset formula, lemon law usage fee, and by other names.

When the manufacturer agrees that the vehicle is a lemon or when the consumer wins a lemon law lawsuit in court, the consumer receives the refund of the following:

(1) down payment and any trade in equity value;

(2) monthly finance or lease payments;

(3) initial registration and other official fees;

(4) consumer’s attorney’s fees.

Since the attorney’s fees are paid by the manufacturer, many attorneys, including Stepanyan Law Firm’s lemon law attorney do not charge any out-of-pocket fees from the consumer and only get paid if they are able to secure a settlement from the manufacturer. Add a free consultation and a case review to this and the consumer will be able to seek and secure a lemon law attorney without paying anything out-of-pocket.

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However, sometimes the vehicle does not begin having problems until it has reached 20,000 miles or more. If the consumer received the total of all monthly payments, the down payment, official fees and attorneys fees for a vehicle that the consumer drove for 20,000 miles without any problems the consumer would end up driving the car for free on manufacturer’s tab.

This is why California lemon law has a provision that allows the manufacturer to charge a certain vehicle usage fee based on the mileage of the vehicle at the time of the first failed repair attempt. This usage fee is calculated based on the statutory lemon law mileage offset formula often called lemon law buyback formula. Although the fee is usually not too large, it is worth knowing about it in advance.

The Logic of the Lemon Law Buyback Formula

Some consumers are surprised that they do not receive the total amount of payments made for the vehicle when their vehicle gets repurchased according to California lemon law. Many blame their lawyer for not being able to secure a full refund. California lemon law, however, uses a mileage offset calculation formula when the vehicle is repurchased as a lemon.

This formula is used to deduct a so-called usage fee from the total number of payments made by the consumer. The California lemon law buyback calculation is based on the mileage of the vehicle before it was taken in to the dealer for the first time for the problem for which it was ultimately repurchased.

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The logic behind the mileage offset formula is that the consumer had the opportunity to use the vehicle for its full potential without any problems up until the mileage when the consumer came across the problem and took the car into the dealership for repairs. The mileage formula thus is often based on the mileage of the first repair attempt of the vehicle.

This mileage offset formula is a specific mathematical formula established by California lemon law, Civil Code section 1793.2.(d)(2)(C), which states:

“When the manufacturer replaces the new motor vehicle pursuant to subparagraph (A), the buyer shall only be liable to pay the manufacturer an amount directly attributable to use by the buyer of the replaced vehicle prior to the time the buyer first delivered the vehicle to the manufacturer or distributor, or its authorized service and repair facility for correction of the problem that gave rise to the nonconformity. When restitution is made pursuant to subparagraph (B), the amount to be paid by the manufacturer to the buyer may be reduced by the manufacturer by that amount directly attributable to use by the buyer prior to the time the buyer first delivered the vehicle to the manufacturer or distributor, or its authorized service and repair facility for correction of the problem that gave rise to the nonconformity. The amount directly attributable to use by the buyer shall be determined by multiplying the actual price of the new motor vehicle paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, by a fraction having as its denominator 120,000 and having as its numerator the number of miles traveled by the new motor vehicle prior to the time the buyer first delivered the vehicle to the manufacturer or distributor, or its authorized service and repair facility for correction of the problem that gave rise to the nonconformity.” Cal. Civ. Code § 1793.2.(d)(2)(C).

Lemon Law Buyback Calculation

The following calculation method is used for a lemon law buyback calculation in California.

((Miles driven until the first repair attempt) divided by (120,000 miles)) times (the price of the vehicle).

Mathematically:

(1st Repair Attempt Mileage / 120,000 (miles)) x (vehicle $)

Here the 120,000 mileage represents the expected life of the vehicle. The number is set by the statute and it is the same for each and every vehicle.

Buyback Calculator


 

Buyback Calculation Examples

Example 1:

The vehicle is repurchased because of engine problems. The first time the vehicle was taken to the dealer for the engine repair was at 5000 miles. The purchase price of the vehicle is $20,000. The expected life of the vehicle is always 120,000 miles. In this case the calculation would be as follows:

(5000 / 120,000) x 20,000 = $833.33 this is the usage fee.
(miles / car’s life) x car’s price = usage fee.

This usage fee of $833.33 will be deducted from any sums the consumer receives from the lemon law buyback.

Example 2:

The vehicle is repurchased because of transmission problems. The first time the vehicle was taken to the dealer for the transmission repair was at 11000 miles. The vehicle also had a small engine problem at 5000 miles, but the dealership successfully repaired the engine. The purchase price of the vehicle is $20,000. The expected life of the vehicle is always 120,000 miles. In this case the calculation would be as follows:

(11000 / 120,000) x 20,000 = $1,833.33, this is the usage fee. Why is the usage fee $1,833.33 and not $833.33 as in the prior example with engine problems at the same 5000 miles? Because the engine problem was successfully repaired by the dealer and the vehicle is repurchased because of transmission problems which began at 11,000 miles and not at 5,000 miles. Hence the usage fee is calculated by dividing the 11000 mileage by 120,000 miles.

This usage fee of $1833.33 will be deducted from any sums the consumer receives from the lemon law buyback. Note that the usage fee is not charged by the attorney. It is a deduction from the total payment. Consumer pays no attorney fees when the vehicle gets repurchased per California lemon law.

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