Do Not Trade in Your Vehicle if You Think it’s a Lemon

We receive telephone calls every day from people who are sick and tired of taking their new car to the dealership for repairs and sadly, by the time some people call us, they have already traded their lemon in for something new. It is completely understandable to want to get rid of a new vehicle plagued by numerous mechanical issues. However, when you trade in your vehicle you may be leaving quite a bit of money on the table.

Generally speaking, a new car loses about 10% of its value, on average, as soon as it’s driven off the lot. While there’s no set rate at which a vehicle will depreciate within the first year, many cars will lose up to 20% of their value the first year and gradually continue to decline every year after that. Factors that can affect a car’s depreciation rate include the make, model, year, type, and color.

According to CarsDirect.com, when you drive a car off the lot, you have agreed to pay the dealer a certain amount of money for the car. Even if you only drive it down the road and change your mind, you are now looking at a car that is only worth the wholesale value. The wholesale value is always less than the retail price of the car. The retail price typically includes ongoing business expenses of the dealership, such as employee salaries, office expenses, and advertising. That’s in addition to a profit margin for the dealership. For a brand new car this initial depreciation can be in the thousands.

If you take the trade in value of your vehicle, you are taking a big financial hit!

When you trade in your vehicle to a dealership, you are given the trade-in value, which is always less than the amount you could have gotten by selling your vehicle to a private party. However, when your vehicle has had a lot of repairs, you are not likely to want to sell it to a private party because you would have to tell the potential buyer about all of the problems that the vehicle has had — especially if they could impact the car’s functionality or safety.

Once a potential buyer hears about a laundry list of repairs, they will most likely not want to purchase your vehicle. Or, if you do not disclose the vehicle’s problems to a potential buyer and they buy your vehicle thinking it is in great working order, they may come back and try to recover their money from you later in court.

The only amounts that may be deducted from your refund are aftermarket items that were added to the vehicle’s purchase 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 this type of a settlement, the manufacturer will pay you a few thousand dollars and you can keep the vehicle, or dispose of it as you see fit. You can still trade in your vehicle for something else, but at least you will have a few thousand dollars from the manufacturer to help make up for the fact that you are only getting the trade-in value for the vehicle.

If you suspect that your car is a lemon, it is crucial to take prompt action to protect your rights as a consumer. Call us for a free case evaluation. Our services are ALWAYS FREE and we are here to help!

California Residents ONLY.
Year restrictions apply: Model years 2021 – 2025 Only