Buying a car is a huge deal, especially when you’re taking out a loan to make it happen. But what if that car turns out to be a lemon? It’s frustrating enough dealing with constant repairs, and having a loan tied to a defective vehicle only makes things more stressful.

If you’re in this situation, California’s Lemon Law can still help, particularly when it comes to how your car loan is handled. Here’s how it all works.

 

What Is Lemon Law?

Lemon laws are a set of consumer protection laws designed to safeguard buyers from faulty vehicles. In California, the lemon law, officially known as the Song-Beverly Consumer Warranty Act, provides some of the nation’s strongest protections for consumers who purchase or lease new vehicles that turn out to be defective.

 

Can I Pursue a California Lemon Law Claim if I Have a Car Loan?

Yes! Having a loan won’t stop you from filing a lemon law claim. What matters is the condition of the vehicle and whether it’s still under warranty, not how you paid for it. 

If you meet the following requirements, you should be able to file a claim, even if you’re still making payments on the car: 

• You bought or leased the car in California from a licensed dealer. 
• You have a valid manufacturer’s warranty at the time of purchase. 
• You reported the issue and attempted repairs before the warranty runs out.  

 

What Will Happen to My Car Loan During a Lemon Law Case?

Your car loan remains active, and you’re still responsible for making monthly payments while the case is being reviewed. Skipping payments could hurt your credit and create problems with your lender. 

 

What Happens After the Loan Ends?

Once your case is over, the outcome could impact your car loan in several ways.

If the manufacturer buys back your car, they’ll usually refund what you paid, though they might deduct a small amount based on how much you drove it before the problem started. You might also get reimbursed for extra costs like towing or rental cars.

If you owe more on your loan than the car is worth (known as negative equity), the refund might not cover the full amount. In that case, you could be responsible for the difference. It’s not ideal, but an experienced Lemon Law attorney can often help work things out with the manufacturer.

 

How to Get Out of a Car Loan on a Lemon

Don’t worry, if you find yourself stuck in a car loan for a lemon, there are a few steps you can take to alleviate the financial burden: 

1. Document Everything: Keep detailed records of all repairs, communications with the dealership, and any related expenses. This documentation will be crucial for your Lemon Law claim.
2. Consult a Lemon Law Attorney: An attorney specializing in Lemon Law can provide valuable guidance and help you navigate the complexities of your case.
3. File a Claim: Once you’re ready, your attorney will help you submit your lemon law claim and handle the legal side of things. 

As mentioned above, there are a couple of potential outcomes. First, if your claim is successful, you may receive a full refund or a replacement vehicle, and you won’t have to worry about your previous loan. Or, your attorney may be able to negotiate with the manufacturer for negative equity so you’re not left paying off a car you don’t have anymore. 

 

Have a Potential Case? Contact Our California Firm Today

If you took out a loan on your car and think you may have a lemon law case, you don’t have to deal with it alone. Our California law firm focuses on Lemon Law cases, and we’re here to fight for your rights as a consumer. Contact us online or call 818-244-3905 to learn more!

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