Leased vehicles may not have lemon law protection

In the past twenty five years, every state has passed a form of consumer protection known as a lemon law. These laws are designed to offer some protection to buyers of new and (sometimes) used vehicles against defects in workmanship. Since the first law was passed in the early 1980’s, thousands of consumers have found relief. Times change faster than laws, however, and in some circumstances, your vehicle may not be covered.

More below.

Lemon laws vary from state to state

Prior to the advent of lemon laws, consumers with perpetually defective vehicles had to beg manufacturers or dealers to help them with their problems. If someone bought a car and the vehicle kept breaking down, the owner was just stuck unless the dealer saw fit to help them out by offering a replacement. Those days are gone, as every state now has a lemon law on the books that protects consumers from the hassles of defective new vehicles. The laws vary from state to state, but in most cases, consumers with problem cars or trucks can receive either a replacement vehicle or a refund of the purchase price.

While the laws are both good and effective, they sometimes don’t reflect changes that take place in how consumers do business. Twenty five years ago, when the first lemon laws were passed, virtually all new vehicles were sold to the end consumer. That is not necessarily the case any more. While the vast majority of new vehicles are, in fact, sold to the end consumer, many people opt to lease vehicles instead.

There are many reasons to lease a vehicle instead of buying one. Those reasons include low down payments and low monthly payments, as well as knowing that you can simply be rid of the vehicle once it reaches a point where it might need regular maintenance. Some people simply want to drive a new vehicle all the time, and leasing allows that with a minimum of hassle. When the lease is up, you can just drive back to the dealership and give them the keys. That’s an oversimplification, of course, but that is pretty much how it works. Auto manufacturers often advertise low prices on television for leases, and when consumers realize that they cannot purchase the vehicle for the low price advertised, they often decide to lease, instead.

That’s fine, but few consumers realize that not all states cover leased vehicles under their lemon laws. One state that does not, as of this writing, is Arizona. Furthermore, a state court recently ruled that those who lease vehicles are also not covered under the Magnuson-Moss Warranty Act, a Federal law that offers consumer protection. Again, the court ruled that those who lease are not “owners”, and both the state law and the Federal law explicitly refer to owners.

Most states’ lemon laws do cover leased vehicles. Anyone who wishes to lease a car, truck, or minivan would be wise to first check with their state’s Attorney General’s office to see if the vehicle they plan to lease is covered under that state’s defective vehicle statute. If not, you may be taking a significant risk when you sign a lease.