Does Lemon Law Apply to Leased Vehicles?

When you lease a car there are lots of benefits: low monthly payments, the opportunity to get a new model every few years, and not having to commit to the vehicle for an extended period. But if the car you lease turns out to be a lemon, what then?

Many people assume that Lemon Law only applies to purchased cars, but that's not true. In some states, Lemon Law protects both leased and purchased cars if they have significant, unfixable defects.

If your leased vehicle is having recurring issues that affect safety, usability, or value, and repairs don't solve them after repeated attempts, you might be entitled to a refund, a new vehicle lease or compensation. The important thing is knowing what your rights are and acting quickly.

At Easy Lemon, our experienced Lemon law attorneys are dedicated to securing the remedy the statute provides for your defective leased car.

We offer a wide range of Lemon law Attorney Services nationwide, helping consumers get refunds, replacements, or compensation for their defective cars. Contact us today for a free case evaluation.

This post will explain what Lemon Law is and how it applies to cars that turn out to be defective after they are leased. It will also talk about what to do if the car you lease turns out to be a lemon and how to protect yourself when leasing a vehicle.

What is Lemon Law?

Lemon Law exists to protect consumers from cars that are defective and cannot be fixed properly by dealers or manufacturers. If you've been unlucky enough to own a car that spends more time at the mechanic's shop than actually on the road, you are not alone. Lemon Law makes sure you don't have to keep a car that the manufacturer has failed to repair properly.

The main purpose of Lemon Law is straightforward: if a car turns out to have a significant defect that the manufacturer doesn't fix even after a reasonable number of attempts, then the consumer is entitled to a replacement or a refund. This law applies for both people who buy cars outright and those leasing them; regardless of whether you are buying or leasing the vehicle, you are protected under this law.

Manufacturers and dealers should not delay repair work or give you a hard time either. Under the Lemon Law if your car qualifies they have to take responsibility. Depending on the situation, you may be eligible for a refund of your payments, a replacement car, or a buyback of your defective vehicle.

What Makes a Car a "Lemon?"

Not every car problem qualifies under Lemon Law, but if there is a major and continuing defect on the vehicle that the manufacturer hasn't fixed after a reasonable number of tries, you might have a case. Usually, a car can be considered a lemon if:

• It has a recurring defect that affects its use, safety, or value.
• The manufacturer or dealership has had four or more repair attempts for the same issue.
• If the defect is a serious safety issue, two or more failed repair attempts may qualify.
• The car has been in the shop for 30 days or more (not necessarily consecutive) due to repairs.

Does Lemon Law Apply to Leased Vehicles?

Yes indeed, Lemon Law protection applies to leased vehicles in the same way it does for cars that are bought outright. However, not every state covers leased cars through their Lemon Law. If your leased car keeps having recurring problems and neither the dealer nor manufacturer can solve them, then you might be entitled to either a replacement vehicle or a refund under the law.

Many people assume the Lemon Law only applies to cars that they have bought outright, but places such as New York state actually do protect leased vehicles under their Lemon Law if those vehicles are still covered by the manufacturer's warranty.

Regardless of whether you own or lease a car, there's protection under the law that prevents you from being stuck with a car that is faulty. If your leased vehicle has been in the shop multiple times for the same issue or has been out of commission for a long time, you might be eligible for help under Lemon Law.

While basic Lemon Law protections apply equally to both leased and purchased cars, there are some differences in how the process works. One of the important distinctions is who owns the car itself.

When you buy a car outright, you own it completely. But if you lease instead, technically the leasing company owns the car and as such they do have some influence over how to handle a Lemon Law claim too.

However, this doesn't mean you don't have rights. If your leased car is a lemon, you are still entitled to a replacement or refund.

Sometimes the leasing company will get involved in a claim, especially when dealing with returning a car or settling any leftover balance. Having an attorney who is experienced in Lemon Law can help you through this process.

Additionally, not every state offers the same level of protection for leased cars. Fortunately, states, such as New York, New Jersey, Florida, Utah, Wisconsin, and Vermont, also extend Lemon law coverage to leased cars, but the criteria for qualifying may vary.

Some states limit coverage to personal-use vehicles, while others may exclude certain lease types. If you're leasing a car outside of your state, it's important to check your state's specific Lemon law provisions to understand your rights.

Coverage of lessees genuinely differs: Louisiana names a lessee in its definition of consumer at R.S. 51:1941(2)(c), and Idaho does the same at Idaho Code 48-901(1), while Alabama's definition at Ala. Code 8-20A-1(1) names the purchaser and anyone entitled by the warranty terms to enforce it, without express lease language.

If your state law does not protect you, there is no need to worry because the Federal Magnuson Moss Warranty Act of 1975 protects you when state laws fall short. No matter which state you live in, this act protects all American consumers.

Electric vehicles (EVs) are also fully protected under Lemon Law whether you lease them or buy them outright. Indeed, protection under Lemon Law could be especially important for EV owners because there is a lot of complexity in battery systems and software components.

If your leased EV has battery failures, persistent charging issues, software malfunctions, or other recurring defects, you may be eligible for Lemon law help.

What Qualifies a Leased Vehicle as a Lemon?

To qualify under Lemon Law, your leased car must have a serious, ongoing issue that the manufacturer has failed to fix within a reasonable number of repair attempts.

Generally, a leased car is considered a lemon if it has repeated manufacturer defects that affect its safety, usability, or value.

This might mean something wrong with your car that makes it unsafe to drive, a recurring mechanical issue that leaves you stranded, or some kind of electrical glitch that interferes with critical functions such as braking or steering.

The Lemon Law also sets specific requirements for repair attempts and time frames. If you've had your car in a shop four times or more for the same issue (or two or more times if it is a serious safety defect) or if your car spends 30 or more days out of action due to repairs, then it might be considered a lemon. Common issues that could fall under the Lemon Law for leased vehicles include:

• Transmission failures that cause rough shifting or sudden power loss
• Engine problems that result in stalling or excessive oil consumption
• Brake system defects that compromise stopping power
• Recurring electrical malfunctions, such as power windows, infotainment issues, or battery failures in EVs
• Steering defects that make it difficult to control the car
• Persistent warning lights that indicate major system failures

What to Do if Your Leased Vehicle is a Lemon

There are certain conditions for your defective car to qualify for Lemon law help. Some of these requirements include specific time frames that must be met. That's why it's important to take action quickly when you realize your leased car is a lemon. Here's what you need to do to start the Lemon Law process.

Step 1: Document The Issues And Repair Attempts

One of the most important things you should do is to keep detailed records of any problems with your car and the work done on it. Having this information documented is critical because it forms the basis for your Lemon Law claim. The more detail that goes into those records, the better.

Whenever something goes wrong with the car, write it down right away. Include the date, a clear description of what is wrong, and how this fault impacts the car's performance.

If your car turns off while you're driving, write down when this happens, how frequently, and any warning lights that come on. If possible, take pictures or videos of anything that is visible like dashboard alerts, leaking fluids or broken parts.

Keep a record of each repair visit for your car. Write down the dates of those visits along with what was repaired (or what repair was attempted) and whether the problem returned.

Keep copies of repair invoices, receipts, and all correspondence with the dealership or service center. If you talked to someone about this problem, face to face, on the phone, or through email, jot down who that person was and what they said.

This paper trail is important because it shows that you have given the dealer a good opportunity to fix whatever was wrong and that the defect still exists even after repeated repairs.

Step 2: Contact The Dealership Or Leasing Company

Once you have a clear record of the car's defects and repair attempts, formally notify the dealership or leasing company. The sooner you do this the better.

It is best to communicate in writing: send an email or letter that spells out the issues, repair efforts made, and your concerns clearly. Include copies of repair records, photos and any communications you have had with the dealer as well.

Be professional but firm in stating that the issue has not been resolved and that you expect a solution.  

Also, ask the dealer or leasing company for a clear solution. Depending on the severity of the defect, this could mean another repair attempt, a replacement car, or a refund of the money you've already paid.

If they refuse to help or keep delaying, don't let them string you along. Keep all emails, letters, and phone call notes, these will be important if you need to take legal action later.

Step 3: Understand Your State's Lemon Law Requirements

Different states have different Lemon Laws, so you need to understand exactly what your state says about leased vehicles. Lemon Law covers leased cars that have a substantial defect affecting their safety, usability, or value, and that hasn't been fixed after multiple repair attempts.

To qualify, your car must meet certain criteria. The eligibility window and the repair count are both set by state statute and they vary.

Indiana runs 18 months or 18,000 miles (IC 24-5-13-7); Alabama's rights period is one year or 12,000 miles (Ala. Code 8-20A-1(8)); Idaho runs the warranty term, two years or 24,000 miles, whichever is earliest (Idaho Code 48-902(1)).

Repair counts vary; Alabama and Alaska both require three repair attempts, while Idaho and Louisiana require four. And finally, if a car is out of service for more than 30 days because of repairs, that car might be considered a lemon.

It's also important to find out what options are available. You might be eligible for a lemon law buyback (full refund of money paid) or a replacement car.

Step 4: Seek Legal Assistance And File A Lemon Law Claim

If a dealer or leasing company doesn't want to cooperate, it's time to get legal help. Lemon Law cases can be complicated and manufacturers often try to avoid paying refunds or providing replacements.

A skilled Lemon Law attorney can handle the process for you, making sure that your rights are protected and that you get the remedy the statute provides.

A lawyer will also review your case and determine the best course of action. If your car qualifies under Lemon Law standards, that lawyer will file a formal claim on your behalf. Many lawyers who handle cases under Lemon Law work on contingency. That means you don't pay any attorney fees unless there is a recovery.

If negotiations with the manufacturer fail, your attorney may take the case to court, but in most cases, settlements are reached before that point. At Easy Lemon, we focus on Lemon Law and our experienced attorneys are here to help you with your leased car. So, reach out to us today for a free consultation.

What to Expect from a Lemon Law Claim for a Leased Vehicle

If your leased car qualifies as a lemon, you're probably wondering what happens next. Will you get a replacement? A refund? Do you still have to keep making lease payments? Here's what you can expect from a successful Lemon Law claim.

An option could be getting a replacement vehicle. If you still need a car and don't want to keep driving the defective one, the manufacturer might offer you a new one of the same make and model. This is often the best option if you want to stay in your lease agreement but no longer want to deal with the defective car.

Another option would be to get a full refund which is sometimes referred to as a Lemon law buyback. Basically this means that the manufacturer will reimburse you for all payments made towards the lease: down payments, monthly payments, registration fees and other related expenses. If you go this way, the lease is canceled and you do not have any further obligations.

One of the biggest concerns for leased car owners is how the Lemon Law claim will affect their lease payments. Once your car is officially deemed a lemon, you are no longer responsible for future payments.

However, it's important to keep making payments while your claim is being processed, missing payments could hurt your credit score and complicate your case.

In most successful lemon law cases, the manufacturer is responsible for covering the costs. These costs include reimbursement of money already paid out, repair expenses, and even legal fees. However, some cases involve a small deduction for mileage driven before the defect was reported.

When to Seek Legal Help for Your Lease Defective Vehicle

While some dealerships and manufacturers deal fairly with Lemon Law claims, many others try delaying, denying, or offering low settlements. So if the dealership is unresponsive or ignoring the problem, it is usually better to talk to a Lemon Law lawyer.

You should seek legal advice if the manufacturer insists on doing additional repairs when the car has already been to the shop many times.

If they're giving you the runaround, asking you to "be patient," or claiming your car doesn't qualify despite clear defects, an attorney can step in and take over the negotiations for you.

Which lemon laws name lessees outright?

Some do, some don't, and the difference decides whether a lessee has a claim at all. Louisiana is explicit: R.S. 51:1941(2)(c) folds "a person to whom a motor vehicle is leased" into the definition of consumer.

Idaho Code 48-901(1) defines a consumer as the purchaser or lessee of a vehicle, other than for resale or sublease. And this definition applies to anyone the vehicle is transferred to during the express warranty.

The term "consumer" is defined differently in Alabama: Ala. Code 8-20A-1(1) says that a consumer is anyone who buys a new car or one that has not yet been titled and also any other person entitled by the terms of the warranty to enforce it.

There is no express lease language in that definition, so a lessee's footing depends on the warranty terms rather than on the statute naming them.

How does a lease buyback get calculated?

Idaho spells this out further than most states. Idaho Code 48-904 states that a lessee has the same rights as someone who buys a car except for one important difference: the lessee is entitled to a refund but not a replacement vehicle.

The lease ends when all payments are settled. A prorated refund of the down payment will be made. This amount is computed by dividing the down payment by the number of months in the lease term and then multiplying by the number of months left after the date of arbitration.

The allowance for use is just your lease payments so far. On top of that, the manufacturer has to pay the lessor early termination fees along with the residual value specified in the lease. All together this sum cannot exceed 105% of the original MSRP (Manufacturer Suggested Retail Price) of the car.

Louisiana takes a different route at R.S. 51:1944(B), where the replacement remedy still applies. If the lessor agrees to do so, the manufacturer can also take the car back, reimburse the lessee for reasonable costs associated with leasing and pay off any early termination fees and related costs as well. However, the lessee still has to pay a reasonable allowance for use of the car prior to returning it.

Indiana signals the same split within its own text. Section IC 24-5-13-11(a) describes how to calculate refunds and applies to vehicles that are not leased. This is why a lease claim there is worked out on a different footing from a purchase.

Why does the lessor matter to a lease claim?

The lease agreement involves two parties: the lessor who leases out the car and the lessee who uses it, and the statutes account for both. Idaho Code section 48-904 distributes early termination fees and residual value payments to the lessor whereas the portion of the down payment that's prorated goes to the lessee.

Louisiana's R.S. 51:1944(B) conditions part of the lease remedy on the lessor being willing to take the vehicle back. Working out who is owed what, and getting the lease formally terminated rather than left open, is usually the part of a lease claim that takes the most untangling.

Get a Lemon Law Attorney for Your Leased Vehicle

If you're stuck with a leased vehicle that keeps breaking down, there's no need to suffer through this frustration; your state and Federal Lemon Law may protect you!

If there is trouble with the engine, electrical problems, or safety issues, and despite repeated efforts the manufacturer cannot resolve them, you might be entitled to a refund or replacement.

The law applies to both leased and purchased cars, so if your leased car turns out to be a lemon, you do have recourse. Key steps are to document any repair work done, understand what your state requires and act promptly before time runs out.

At Easy Lemon, we've helped drivers get the resolution they deserve, and we're ready to do the same for you. Don't let a defective car cost you more time and money. Contact us for a free initial consultation and let's get it sorted today!

Related reading

• What Is a Lemon Law Cash and Keep Settlement?
• Should I Buy A Lemon Law Buyback Car?
• How Long Does a Lemon Law Case Take? Average Timeline
• How Much Do Lemon Law Attorneys Cost?
• Federal Lemon Law Used Cars 

Helpful guides: Lemon Law FAQ · What is The Lemon Law