Understanding Indiana Lemon Law
Understanding Indiana Lemon Law
Roughly 150,000 cars sold in America every year are classified as lemons: cars with repeated, unfixable problems. Lemons can come from any manufacturer: Chevrolet, Honda, Ford and almost every other manufacturer has built lemon vehicles over the years.
“Lemon laws” enacted across the United States help protect consumers who purchase defective vehicles and compensate them for their losses. Additionally, a powerful federal law known as the Magnuson-Moss Warranty Act provides protection for consumers who purchase cars that are having problems under the manufacturer’s warranty. Some lemons may eventually be recalled by the manufacturer, if the problems are systemic.
The Indiana lemon law covers any consumer who enters into an agreement or contract in Indiana for the transfer, lease, or purchase of a motor vehicle.
The law covers vehicles weighing less than 5 tons that are sold and registered to an Indiana consumer. The law also protects consumers who don’t live in Indiana but buy a vehicle in the state. The vehicle must be intended primarily for operation on public highways, and registered or licensed before use or operation.
The Indiana lemon law covers used vehicles. It does not, however, cover conversion vans, motor homes, farm tractors, road building equipment, semi-trucks, road tractors, motorcycles, mopeds, snowmobiles or vehicles designed primarily for off-road use.
The lemon law covers “nonconformities,” defined as any specific defect or condition or combination thereof that substantially impairs the use, market value or safety of the vehicle. The defect and condition must also render the vehicle nonconforming to the warranty.
Indiana’s lemon law does not, however, cover minor issues that don’t substantially impair the vehicle’s use, value, or safety. For example, a slight rattle or problem with the radio isn’t a nonconformity.
Problems caused by the consumer’s abuse, neglect, or unauthorized modification or alteration are also not covered by the Indiana lemon law.
The Indiana lemon law compels manufacturers to repurchase or replace a vehicle if they are unable to “correct a nonconformity after a reasonable number of attempts.” The lemon law defines that as four or more times for the same problem without success, or if the vehicle is in the shop for 30 days or more without successfully repairing the problem.
The consumer must notify the manufacturer in writing of a lemon law claim if the manufacturer has clearly and conspicuously disclosed in the warranty or owner’s manual that such notice is required.
If the consumer notifies the manufacturer or their authorized agent of a nonconformity within 18 months or 18,000 miles after the vehicle’s original delivery to the consumer, the manufacturer must repair the issue. The manufacturer must repair the nonconformity even if the repairs are made after the expiration of the aforementioned term of protection.
The manufacturer must replace or repurchase the nonconforming vehicle if they are unable fix the problem after a reasonable number of attempts. The consumer chooses whether they want the vehicle repurchased or replaced.
When replacing a vehicle, a manufacturer must provide a replacement vehicle of comparable value. The manufacturer must also reimburse the consumer for fees and sales taxes, as well as necessary towing and rental costs incurred as a direct result of the nonconformity.
Manufacturers repurchasing a nonconformity vehicle must pay the total contract price of the vehicle, including all credits and allowances for any trade-in vehicle. They must pay all sales taxes and fees, expended finance charges, the cost of all options added by the dealer and costs related to towing. The manufacturer can withhold a reasonable allowance for use, calculated based on the amount of miles traveled prior to the manufacturer’s acceptance of the returned vehicle.
The Indiana lemon law states its protections don’t apply to a consumer who hasn’t first resorted to the manufacturer’s established informal dispute settlement procedure, i.e. arbitration. The arbitration mechanism must be certified by the Indiana Attorney General. The manufacturer must also have provided adequate written notice of the mechanism’s existence, including its incorporation into the terms of the warranty.
In some instances, arbitration can allow for a faster resolution of conflicts between consumers and manufacturers. Arbitration hearings usually last only one day, and take place in a much less formal setting than a court. Consumers should bring all documents relating to the vehicle and the repair process, including the letters exchanged with the manufacturer. They should also arrange for witnesses to appear at the hearing, including friends who have witnessed the vehicle’s problems.
However, arbitration often ends with an outcome unfavorable to the consumer. The third party arbitrator may award the consumer with additional repair attempts, which doesn’t provide any remedy they didn’t have before. They may also decide to dismiss the claim, siding with the manufacturer. The law makes no mention of the ability to recoup attorney’s fees during arbitration. Fortunately, the federal Magnuson-Moss Warranty Act allows for consumers to sue for attorney’s fees alongside damage awards in court.