While it’s frustrating to spend money on a car that has serious (and dangerous) mechanical flaws, the California Lemon Law protects your rights and interests by making the automaker or dealer repurchase your car from you. If you are eligible, the dealer or manufacturer must use a specific formula to determine how much to pay you.

So what is the California Lemon Law Repurchase Formula, and how does it affect your payout?

What is The California Lemon Law Repurchase Formula?

The California Lemon Law Repurchase Formula lays out what the manufacturer or dealer must compensate you for and what they can deduct for by law.

Under the formula, the dealer must refund your down payment, monthly car payments, license and registration fees, and sales tax. If the sales tax, license, or registration fees were prorated into your monthly car payments, then you’ll be reimbursed only for what you’ve paid so far.

The dealer must also reimburse you for any expenses and costs you incurred while your car was in the shop for a Lemon Law claim. Examples of reimbursable expenses include rental cars, tow truck fees, taxi fares, and more. The dealer must also pay any prepayment penalties, finance charges, or termination charges you have incurred or will incur as a result of selling the car back to the manufacturer.

The dealer does not have to reimburse you for any optional upgrades, such as an aftermarket stereo you installed in the car.

They also have the right to deduct your mileage using a special calculation. To determine the mileage offset, the dealer must multiply the miles the car had on it when you first presented it for repair by the cash price you paid, then divide this figure by 120,000, a representation of miles. So, if you paid $15,000 for the car and drove 12,000 miles before you brought in the car, the formula would be: 15,000 * 12,000 / 120,000 = $1,500.

If you are pursuing a Lemon Law claim, always double-check the mileage figure used by the dealer. Some dealers may use a later mileage as the basis for their calculations, rather than the mileage from your first presentation of the problem. An error with the mileage deduction reduces the amount of money you’ll receive under the California Lemon Law Repurchase Formula.

Repurchase of a Leased Vehicle Under the California Lemon Law

If you leased your vehicle rather than purchased it, the process is somewhat different. The California Lemon Law does not outline a specific formula for repurchase of leased vehicles; however, the California Arbitration Review Program suggests the following:

The lessor shall receive the pay-off amount due under the lease, less the lessor’s security deposit and refund lessor would receive for an unexpired service contract.

The lessee is reimbursed for fees (sales tax, registration, license), incidental damages (i.e., rental car and towing costs you incurred as well as penalties or early termination charges), any base monthly payments you’ve made up until the time of repurchase, the value of your deposit or trade-in amount, and the value of your security deposit. The same mileage deduction formula applies to leased vehicles.

Preparing for Your Lemon Law Claim

The first step in preparing for your Lemon Law claim is verifying that you are eligible. If your car was purchased in California and is still under manufacturer’s warranty, you qualify. As a general guideline, you must allow the dealer or manufacturer to make four attempts to fix the problem before you can initiate a Lemon Law claim to recover your money. If the problems are so severe that they could cause death or grievous bodily injury, the manufacturer or dealer must make at least two attempts to fix the problem. If the vehicle has been in the shop for thirty days, non-consecutively, and the original issue has not been fixed, you may file a claim. If you are unsure whether you are eligible, consult an attorney who handles Lemon Law cases. This is a risk-free move for you, since the attorney’s fees count as an incidental expense that is eligible for reimbursement under the California Lemon Law Repurchase Formula.

Once you understand how the repurchase price is calculated, gather any documentation that will support your claim, including receipts that show the incidental costs you incurred while dealing with the claim. Then work with your attorney to file the claim and begin the process of getting money back.

If you believe you are entitled to a bum vehicle repurchase under the California Lemon Law, hire an attorney at the outset, as soon as you know you will pursue the claim. Your attorney will make the process smoother and help you circumvent delays as you gather documentation, initiate the claim, and work toward a safe and fair resolution.

If you’d like to speak with an attorney about a potential claim or to learn how the repurchase formula might be applied to your case, contact the California Lemon Law attorneys at Neale & Fhima. Schedule a free consultation by filling out our online contact form or calling us at 888-568-5405.