Guide Guide to New Leased Car Lemon Law

Learn the steps to take to get compensation for your new leased vehicle if it is eligible under the Lemon Law. Note that the Lemon Law does not apply to used leased vehicles.

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Leased Car Lemon Law Overview

Under the Massachusetts Lemon Law, you may receive compensation for your new leased car, motorcycle, van or truck if you bought it in Massachusetts from a licensed dealer and it has at least one defect that substantially impairs its use, market value, or safety. The vehicle must be used by you for personal or family purposes. The defect(s) must be discovered and subject to a reasonable number of repairs during the "term of protection" of 1 year or 15,000 miles of use from the date of the original delivery, whichever comes first.

You can pursue compensation under the Lemon Law by dealing directly with the dealer or manufacturer. If your attempts to receive compensation aren’t successful, Lemon Law arbitration is available through the Office of Consumer Affairs and Business Regulation (OCABR). 

Determine if your vehicle is covered

A vehicle is considered a lemon if it has a substantial defect that impairs your safety or your ability to drive it, or impacts its market value and the car has not been repaired after a reasonable number of attempts.

The new car section of the Lemon Law covers:

  • New cars, motorcycles, vans, or trucks leased in Massachusetts from a dealer for personal or family purposes
  • Vehicles within the “term of protection” — 1 year or 15,000 miles of use from the date of original delivery, whichever is first
  • Cars leased after July 1, 1997

You do not meet the basic qualifications for Lemon Law compensation if your vehicle does not meet the criteria above. 

If your car is eligible, you must be able to demonstrate specifically how the use, safety, or market value is substantially impaired by the defect. To prove the market value impairment, you must show that your vehicle is worth at least 10% less than it would be without the defect. The best way to prove this is by having your car appraised.

Key Actions for Determine if your vehicle is covered

Steps to start the process

Before you can become eligible for reimbursement under the Lemon Law, you’ll need to take the following steps.

The law defines a reasonable number of repairs as 3 times for the same defect, or 15 business days for any combination of defects. These repair attempts must be done by the selling dealer, or a dealer that the manufacturer authorizes.  

Stage 1) Repair attempts

You must allow the selling dealer, a dealer that the manufacturer authorizes, or the manufacturer a reasonable number of attempts to repair the defect. The law defines a reasonable number of repairs as 3 times for the same defect. If the problem is still present after 3 or more repair attempts within 1 year or 15,000 miles of the original date of delivery of the car  — whichever comes first — then you can move onto Step 2.

Please note: If your car is out of service during repair attempts for 15 or more business days, that also meets the requirement, even if there aren’t 3 separate repair attempts. Under this law, a business day is any day the service department of an authorized dealer is open for business.

During the repair process, make sure that you:

  • Keep complete and accurate records of all contact with the manufacturer and dealer.
  • Keep all receipts.

PS: You have a right to a dated, itemized bill for any repair work, including warranty repair work, under statewide Motor Vehicle Regulations (940 CMR 5.05).

Step 2) Final repair attempt

As long as you met the criteria in Step 1 within the first year/15,000 miles, you have up to 18 months from the date you first took possession of the vehicle to take the remaining steps.  If the substantial defect continues after the dealer or manufacturer has made the initial repair attempts, you must give the manufacturer one final repair opportunity, not to exceed 7 business days, to fix the defect. The 7 business day period begins when the manufacturer knows or should know that the repair requirements have been met or exceeded.  It is recommended that you notify the manufacturer by mail, return receipt requested, by regular mail and by email to the manufacturer’s regional office. Keep copies of all documents.

Step 3) Requesting a refund

At the end of the 7 business days, if the substantial defect has not been fixed you have the right to request a refund.  Alternatively, the manufacturer may offer to replace the vehicle instead of refunding your money, but they cannot force you to accept a replacement instead of a refund.  

Step 4) Final actions

If you have taken the first three steps and the manufacturer refuses to refund your money or offer an acceptable replacement, you may apply for arbitration as long as your application is received by the Office of Consumer Affairs and Business Regulation within 18 months from the date you first took possession of the vehicle.

 

 

Additional Resources for Steps to start the process

What is included in the refund?

If you're offered a refund for your leased car, you’ll receive the total lease payments you made under the agreement.  A reasonable allowance for use will be deducted based on the total payments made divided by 100,000 and then multiplied by the mileage.

Total lease payments made to date: 

______$/month X ______months

(Note: include 1st payment, even if it was due at lease signing)

Total payments made under the lease (total of the 3 payments below)

  1. Acquisition Fee not included in lease payments
  2. Cash paid at lease signing to reduce capitalized cost (e.g., down payment, balloon payments)
  3. Trade in allowance

Additional expenses: 

Security Deposit:

Sales Tax on Down Payment Amount:

Registration Fees:

Extended Warranty

Non-reimbursed Towing Charges:

Non-reimbursed Costs for Alternate Transportation:

Repair Charges:

Credit Life/Disability Insurance

Documentary Preparation Fee:

Settlements or Awards Received:

Other:

Key Actions for What is included in the refund?

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