No one wants to make car payments on a non-functioning vehicle. If it seems like your new car is always in the shop or a particular problem keeps popping up again and again, you may own a lemon. Although state laws vary, all 50 states provide car buyers some form of recourse if they inadvertently purchase a lemon. Should you find yourself stuck paying for expensive repairs on a car you recently purchased, you may have grounds to get rid of the lemon and get out of your auto loan.
Lemon Laws
Just because a car suffers from frequent repair issues, that doesn't make it a lemon. Each state has different criteria a vehicle must meet before being classified as a lemon. As a general rule, lemon laws apply only to new vehicles.
A true lemon suffers from a considerable defect. Each state classifies these defects differently, but major issues, such as transmission problems or engine trouble, usually constitute a defect significant enough to make the car a lemon. In order for you to have legal recourse, the defect must occur before the car reaches a certain mileage, and you must have attempted to repair the problem.
Your Rights
If your car meets your state's definition of a lemon, you have the right to demand that the manufacturer either replace the vehicle or refund you the purchase price. You must provide thorough documentation that your car suffers from repeated problems that you tried to fix without success.
You must solve the problem through the manufacturer--not the lender that financed your vehicle. Your lender did not sell you the vehicle and is not responsible for its poor condition. Thus, you cannot default on an auto loan simply because your car is a lemon.
Payments
If the manufacturer offers to refund you the price you paid for the vehicle, you can use the refund to pay off your auto loan--eliminating the burden of making monthly payments on a car that doesn't work properly. With your loan paid off, you can then secure another loan to purchase a more reliable vehicle.
Warning
Defaulting on your auto loan carries severe consequences. Not only will your lender repossess your vehicle, it will report the repossession and your missed payments to the credit bureau. This hurts your credit score and makes obtaining a new auto loan difficult, if not impossible. If your lender cannot sell the car for a high enough price to cover your auto loan, it will sue you for the balance. You are responsible for paying your auto loan on time, regardless of whether or not your car is a lemon.
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