Buying a used car that was a "lemon law" buyback.

[the]

I have a friend in California who is considering buying a late model used car.

It was a "lemon law" buyback. In other words, the manufacturer bought it back from the owner, under the lemon laws.

Now, normally, I'd say don't touch it, esp. if it the warranty problems were electrical in nature. You never know if they were really fixed.

But this car is a manual transmission. The lemon law paperwork clearly shows the only problem with the car was it would pop out of first gear. Obviously, something wrong in the manual gearbox. The gearbox was replaced with a new unit by the dealership, there is no problem. The car still has the full factory warranty, PLUS an additional year/unlimited mileage warranty on the transmission.

The reason it had to be bought back was because it was out of service, sitting at the dealership for so long, waiting for the new trans to come in, get it put in the car, etc.

He's not concerned at all about the new trans having any problems, I agree.

The concern is this: The title to the car is now branded "lemon law buyback." It is stamped on the title and on Carfax. Seems to me that although it this case, mechanically it doesn't affect the car, it sure can't HELP it's future resale value.

Has anyone ever tried to sell a used car with a title branded like this? How much harder is it? What's a reasonable discount to expect?

[Scuba Steve]

I've been trying to sell my 924S, which was branded because in 1990 something happened (don't think it was totaled, maybe stolen / recovered). Even though it's in excellent condition, it's been difficult to say the least. No telling how long it would've taken if it weren't for a family member that's tired of feeding his Suburban and wants something with better mileage.

I'd keep looking.

[Noney]

These manufacturer buybacks are some of the best deals in the highline car business. I'm assuming your friend is looking at a BMW or Mercedes (although Maserati and a few others do buybacks as well). As you have stated, the reason the car was branded a lemon was because it was out of service for too long (here in Florida it's 2 cumulative weeks within a 2 year period, not sure what the figures are in California). If the transmission had been sitting there ready to put in, then the issue would have been fixed and the car would not be a "lemon". The original owner was obviously aware of the lemon law and invoked his/her right to a new car. Your friend will be required to sign papers showing he is aware of the buyback issues.

His concern about a branded title is valid if he sells the car to someone in a state that recognizes the branding. All states do not recognize it. CarFax and AutoCheck will still show the brand, however. As far as pricing, he should expect to pay anywhere from 8-12% less for a "lemon" than for a non-lemon car. This "discount" will be passed on to the next buyer when it comes time to sell, making his car come in at 8-12% less than comparable cars, and he will have the buyback documentation to show the new owner.

Some really great deals can be had on buybacks, especially if the car was a "courtesy" buyback (the manufacturer will buy the car back from an unruly customer just to shut them up and make them happy, usually by putting them in a less-expensive car (sometimes people get in over their heads and can't afford that 100K Benz they signed up for)).

Don't be scared of the word "lemon", just make sure he's aware of exactly what he's getting in to.

[Netspeed]

I can tell you from fact that most of the lemon law buybacks when I was at the dealer were bogus in nature. I used to manage a service department for a SoCal Chevy dealer. The factory sees it this way most of the times: It costed $40k to do the buyback and $50k to fight it. Simple math....do the buyback. Most of the time, the clients either didn't like the vehicle after they bought it or could not afford the payments. There was usually nothing wrong with them.

Example: Customer with a van with a gas gauge that swang from full to empty when stopping. GM sent us the van to check out as a last resort. They could never duplicate it nor could we. We brought the customer in and guess what he was doing? He was shifting into neutral (automatic) when he came to a stop and that took the computer's buffer out of the equation. He knew he was doing it to fool the system to.

Example: Customer with a brand-new Vette complained and had it towed in multiple times that it wouldn't start. We tested it over the span of a week and probably started it 2-30 times a day. Guess what? He confided with the techs that he really wanted a Tahoe but his mom bought him a Vette.

I don't think that "lemon law" cars are branded as salvage. As for salvage cars...I'd run as fast as you can away from them.

[Tobra]

If it is a Honda Civic, pass on it, defects in transmission case lead to premature failure. If it was repaired, forget it, if it was completely replaced, might be okay.

[Zeke]

A nephew had a C4 Corvette given to him for HS graduation. It died the next day. Needless to say, the father was ballistic that his gift was a lemon. Well, the dealer fought hard, but the car was unstable. Finally, they exchanged it for another.

It turned out that a screw on the sun visor penetrated a wire and was intermittently grounding out. Someone got a good car once that screw was found, but the father insisted that the car go away after the 3rd tow in 2 weeks. That's not even close to meeting the criteria for a lemon in CA.

[Netspeed]

Originally Posted by milt

A nephew had a C4 Corvette given to him for HS graduation. It died the next day. Needless to say, the father was ballistic that his gift was a lemon. Well, the dealer fought hard, but the car was unstable. Finally, they exchanged it for another.

It turned out that a screw on the sun visor penetrated a wire and was intermittently grounding out. Someone got a good car once that screw was found, but the father insisted that the car go away after the 3rd tow in 2 weeks. That's not even close to meeting the criteria for a lemon in CA.

I agree that they are defects in cars from the factory. Trust me....if service departments had to rely on customer pay items, they would have been out of business a looooong time ago.

The problem with this Vette in particular was that the customer was only about 5'3". On the Vettes, you have to push aaaalllll the way down to disengage the clutch switch. Poor design? Yes. Lemon? Not really....

Don't get me started on the subject of "decontenting"....