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What to do if you’ve bought a lemon car

Just bought a car only to find it needs repairs? You're not stuck dealing with your new or used lemon car.

The last thing you want after buying a new or new-to-you car is to find out it’s a lemon. But if that happens, you may not be responsible for paying for repairs and replacements. Know what consumer protection measures are available in Canada to help you navigate the sticky situation after you’ve bought a lemon car.

Broken Down Yellow Car On RoadsideWhat is a lemon car?

The Government of Canada’s Office of Consumer Affairs defines a “lemon car” as a vehicle with any manufacturer’s defect that impacts the car’s proper function, safety or estimated value. Each province or territory’s consumer affairs office may have slightly different definitions for lemon cars too, like defining it as any car with defects caused during the manufacturing process.

What to do if you’ve bought a lemon car

If you think you’ve bought a lemon car, you may not be stuck with it. Both the federal and provincial/territorial governments in Canada have measures in place to cover you in that situation. Here are 3 options you can use to get your car fixed or even refunded.

1. Repair through the car’s warranty

If you’ve bought a new car, or a used lemon car that’s still under it’s manufacturer’s warranty, you can have all repairs done through the warranty. These types of repairs are usually done at the dealership where you bought the car and the cost is covered by the manufacturer. Ideally, any issues with your car would be resolved at this point and you wouldn’t need to take any further action.

If you’ve bought a used vehicle that’s no longer covered under a manufacturer warranty, than your best option is to contact your provincial or territorial consumer affairs office, which can advise you about the appropriate next steps for your specific situation.

2. Seek arbitration through CAMVAP

If the manufacturer refuses to cover repairs to your lemon car, or you’re not satisfied with the repairs that have been done, your next option would be to contact the Canadian Motor Vehicle Arbitration Plan (CAMVAP). CAMVAP is a free program, which is able to arbitrate between the consumer and manufacturer to negotiate anything from covering the cost of repairs to buying back the defected vehicle. The arbitrator will analyze the situation to determine what solution will best suit both parties.

Only vehicles that are no more than 4 years old and with fewer than 160,000 km are eligible for the CAMVAP program. If you decide to work with CAMVAP, keep in mind that its arbitration is binding – meaning that all final settlements cannot be altered or challenged in court.

Not all vehicle manufacturers sign up to participate in the CAMVAP program. For example, BMW, Mini and Mitsubishi are not affiliated with the program, so any lemon cars bought from those manufacturers are not eligible for the program. Check its list of participating manufacturers for more information.

3. Go to Small Claims Court

If your lemon car isn’t eligible for CAMVAP, you chose not to use it or you’re not pleased with the results of your private arbitration, you can pursue the matter in Small Claims Court. However, this requires hiring an attorney and providing lots of documentation. The process can be long and expensive, so determine if it’s worth your time and money before pursuing a lawsuit against the company.

  • Be on the lookout for arbitration clauses

Some dealerships and manufacturers work an arbitration clause into your contract when you buy a car. These state that any disputes you may have with a company must be settled through arbitration, which means settling your dispute through a third party — not in court. Before signing any documentation, look for the arbitration clause and read it carefully. You may have a chance to opt out of it within the first few months of ownership. But if you don’t, it will be considered legally binding.

If you do have to go through arbitration because of a lemon car, try to opt for CAMVAP rather than a private arbitrator or the manufacturer’s arbitration team.

A step-by step guide for what to do when you buy a lemon car

The key to getting a refund or replacement vehicle for your lemon car is keeping track of every issue and repair that takes place. Follow these steps if you suspect your car may be defective:

  1. Note the issue you’re experiencing and check your warranty documents to see if they’re covered.
  2. Look up the resources available to you at your province or territory’s consumer affairs office.
  3. Report your problems to the dealership and manufacturer.
  4. Document everything, including repairs done by the dealer and manufacturer.
  5. Write to the manufacturer to start the buyback process if repairs fail to fix the defect.
  6. Contact an arbitrator or lawyer if problems continue to persist or the buyback process is stalled by the dealership or manufacturer.

Is there a lemon law in Canada?

No, Canada doesn’t have lemon laws like they do in the States. The closest thing to a lemon law in Canada is the Canadian Motor Vehicle Arbitration Plan (CAMVAP) program, which helps resolve disputes between vehicle manufacturers and people who bought a new car that turned out to be a lemon. If you bought a lemon used car, you should be covered by consumer protection laws under your provincial or territorial consumer affairs office.

Why should I report my problems to the dealership?

You should report any issues to both your dealership and manufacturer so that it alerts them to the problem and gives them a chance to repair or fix the defect. It also shows that you’ve taken action to deal with a problem — which may be important if problems persist. Like if the manufacturer doesn’t abide by its warranty or the dealership doesn’t abide by its service contract.

What are some common defects associated with lemon cars?

Some parts of cars are more prone to issues than others, including in-car technology, electronics and the engine. If you really don’t want to run the risk of having trouble with your new car, you can keep things simple by avoiding overly high-tech models.

Car problems can also encompass issues not disclosed by the seller. Keep these common issues in mind to avoid buying a new or used lemon car:

  • Undisclosed damage. Dealerships and private sellers don’t always disclose previous accident damage, and sometimes repairs to lemon used cars are strictly cosmetic. This can have a significant impact on if you’ll need to make unexpected repairs shortly after buying a used car. Run a VIN check to check the vehicle’s history and avoid any surprises.
  • Odometer fraud. There have been cases of dealerships and private sellers adjusting the odometer to make it look like the car is less used than it actually is. Compare the odometer against the car’s service record and check for inconsistencies between the odometer and the car’s wear and tear. According to Canada’s Weights and Measures Act, it’s illegal to tamper with an odometer.
  • Missing documentation. Your dealership or seller must provide service records and other documentation when you purchase a vehicle. Make sure all of it’s correct and that it’s all there. If not, you could be missing a crucial piece of information that shows your car may be a lemon.

Should I buy a salvage title car?

Are repairs to lemon cars free?

If the defects are due to faults during the production or assembly of your car, they’re likely covered under your warranty. Most warranties typically cover the cost of parts and labor needed to repair a defect caused by the manufacturer. Document all repairs carefully, and don’t be afraid to keep bringing your car back if you discover more problems. It’s the manufacturer’s responsibility to make sure you have a safe and reliable car — but in some cases, you may be required to front some of the cost yourself or pay for your own transportation while your car is being repaired.

How can I file a consumer complaint?

If your dealership or manufacturer fails to satisfy you after you’ve bought a new or used lemon car, you should take steps to file an official complaint with Transport Canada. Have your email address, vehicle identification number (VIN) and the vehicle’s make, model and year ready. Then follow the instructions on the complaint form, supplying documentation of the defect where required.

You may also want to consider filing a complaint with trusted consumer websites like the BBB. While you may not get a personalized response from the dealership or manufacturer, you can help others avoid the same problems you’ve had by making them aware of potential issues.

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Bottom line

If you bought a vehicle with manufacturer defects it may be considered a lemon. Be sure to document every defect and repair, and don’t wait until the last minute: The sooner your report an issue, the sooner it can be dealt with under your warranty.

When you’re finally ready to get rid of your lemon and buy a new car, check out our guide to car loans to compare your financing options.

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