Can I Give My Lemon Car Back to the Dealer?

giving car back to dealer, California Lemon Law case, Manufacturer Buy Back

Do you remember how much you loved your new car when you first drove it home? Everything from the make and model, to all of the latest high-tech features it came equipped with, to the way you felt as you drove down the road. It made you smile!

Now you find yourself returning to the dealership time and time again trying to get the same problem fixed. Whatever defect your car has, it has now substantially impaired your use of the vehicle, its value, and the vehicle is no longer safe to drive.

You’ve discovered that under the California Lemon Law your new car is a lemon and you simply want to give it back to the dealer who sold it to you.

There are remedies for dealing with a faulty car that you do not want. Unfortunately, simply bringing it back to the dealership is not one of them.

Why You Can’t Just Give Your Car Back to the Dealership

Just giving your car back to the dealer and getting a full refund, or trading it in for a brand new car, may seem like the ideal solution. However, doing so comes with its own unanticipated problems.

If you financed your new car, like it or not, you’re tethered to that lemon by a payment book. You have a contractual obligation to pay off that loan.

Assuming that you have no recourse under the California Lemon Law, and the dealership has no return policy (if they’ve ever even heard of such a thing), giving the car back could have negative credit implications. This is something most people don’t think about, but should seriously be taken into consideration — especially if you ever plan to make another major purchase, such as a new vehicle or a home.

Returning the car to the dealership may seem as though it’s just a return of a faulty product. But keep in mind that the dealer doesn’t own the car; the finance company does. Returning it won’t magically wipe the debt from your credit report.

Giving the car back will have the same negative impact on your credit score as a repossession.

Aside from what this course of action could do to your credit score, with any repossessed vehicle it would be auctioned off for less than retail price (wholesale value), and much less than you originally paid for it. You would then be responsible for the difference between what the car sold for at auction and the remaining loan balance, plus all of the expenses involved with auctioning off the car. Your total expenses could end up costing you thousands of dollars.

Taking the car back to the dealership, handing over the keys, and expecting a full refund is not going to work.

What if the Dealer Offers You a Trade-in?

Trading in your car for another one is going to mean more money out of your pocket since your new car is worth considerably less than you actually paid for it.

According to CarsDirect.com, a new car depreciates, or loses value, almost immediately after you drive it off a dealer’s lot. As a general rule of thumb, a car will lose between 15% and 20% of its value each year. A car in its second year will be worth 80% to 85% of its first year value and a car in its third year will be worth 80% to 85% of its second-year value.

Will the Auto Manufacturer Buy it Back?

The only entity that can truly buy your car back from you under the California Lemon Law is the automobile manufacturer. A dealership may offer a buyback and they even tell you that they are “buying your car back” under the lemon law, but the dealership does not have that ability. What the dealership is really doing is a dealer assisted trade-in. This solution does not give you all of the benefits of a lemon law repurchase.

Occasionally, an automobile manufacturer may agree to buy your vehicle back from you, but the terms of the buy back may not conform to the law. For example, under the California Lemon Law, you are entitled to:

  • your down payment
  • all of your monthly payments
  • registration fees, rental car fees and towing fees

In addition, you get to keep your credit report blemish-free since your entire loan balance will be paid off in full by the manufacturer.

The only amounts that may be deducted from your refund are aftermarket items that were added to the purchase price at the time of the sale such as gap insurance or service contracts, and the mileage offset which is a credit to the manufacturer for the “good miles” on the vehicle before the problems began.

Even if the manufacturer does not repurchase your vehicle, we may still be able to obtain a “cash and keep” settlement for you. In a “cash and keep” settlement, the manufacturer pays you a few thousand dollars and you keep the vehicle or trade it in for something else.

Will the BBB Help Resolve the Program?

If you do try to go through the Better Business Bureau’s Autoline Dispute Resolution Program, you may think that you are getting a fair and unbiased neutral person to hear your case. Unfortunately, their “fair and unbiased mediators” are actually paid for by the automobile manufacturers. We have had clients come to us for assistance after an unfair result at the BBB’s hearing and we have gotten them a much better result.

contact us about a possible lemon law case

Loose Lips Sink Ships

As a word of caution, as tempting as it may be, do not post your grievances on any of your social media sites, or auto forum chat rooms, or anywhere on the Internet. Use those sites to browse around and read what others are posting. Do not post anything that an attorney for the auto manufacturer will most likely find and try to use against you in a deposition, mediation, or even at trial. In addition, as unhappy as you may be, please do not complain to dealership personnel that you think your vehicle is a lemon because they may be less likely to try to find a problem and repair it, thereby making our job more difficult later on.

Contact Us First

If you are thinking about starting a lemon law case, contact us before you attempt to trade in your vehicle. If you are not satisfied with your BBB arbitration results, or if you have been told that the way your Ford Focus or Ford Fiesta transmission system operates is “normal,” we can help you determine whether or not you have a lemon law case.

Unlike many other Lemon Law Attorneys, we never charge our clients any fees!

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Debbie Horowitz

Deborah L. Horowitz, an attorney who has been licensed in California to practice law for over 15 years, has dedicated her entire legal career to protecting consumer rights. She has settled over 8,000 lemon law cases and achieved excellent results for her clients.