California Lemon Law Buyback: How Your Refund Is Calculated

When a vehicle qualifies under California's lemon law, one of the primary remedies is a buyback — also called a repurchase. In a buyback, the manufacturer essentially unwinds the sale: it refunds what you've paid and takes the defective vehicle back. But the amount isn't arbitrary. California's Song-Beverly Consumer Warranty Act sets out specifically what a buyback must include and how it is reduced.

What a buyback includes

A California lemon law buyback is designed to make you whole for what you actually spent on the vehicle. That generally includes:

• Your down payment and any trade-in value applied at purchase.
• All monthly payments you've made to date.
• The remaining loan or lease balance (the manufacturer pays off what you still owe).
• Incidental and consequential costs — items like sales tax, registration and license fees, and reasonable expenses such as towing or rental car costs caused by the defect.

The mileage offset

The one major deduction is the mileage offset — an amount the manufacturer is allowed to subtract for your use of the vehicle before the defect first appeared. California uses a statutory formula: the purchase price is multiplied by the number of miles you drove before your first repair visit for the defect, divided by 120,000.

For example, if you paid $40,000 for the vehicle and first brought it in for the defect at 12,000 miles, the offset would be $40,000 × (12,000 ÷ 120,000) = $4,000. Crucially, only the miles before that first repair attempt count — all the miles you put on the car afterward, while the manufacturer was failing to fix it, do not increase the offset.

Your other options: replacement and cash-and-keep

A buyback isn't the only remedy. You can usually choose a replacement vehicle of comparable value instead of a refund, subject to the same mileage offset. Many owners instead opt for a cash-and-keep settlement, where you keep the vehicle and the manufacturer pays you a negotiated cash sum. The right choice depends on whether you still want the car and how the numbers compare for your situation.

Civil penalties and attorney fees

If a manufacturer willfully fails to honor its obligations under the lemon law, California allows a civil penalty of up to two times your actual damages. Separately, the law requires the manufacturer to pay your reasonable attorney fees and costs on a successful claim — which is why reputable lemon law firms take these cases at no upfront cost to you.

Because the exact figures turn on your paperwork and the specific defect history, a free case review is the best way to estimate what your buyback or settlement could look like.