Lemon Cars in New Jersey: How to Get a Refund, Replacement, or More

Potential Remedies and Compensation Under New Jersey Lemon Law

According to national consumer reports, hundreds of thousands of vehicles sold each year in the United States may qualify as lemons due to persistent mechanical defects. In New Jersey, thousands of car buyers file complaints annually, frustrated with vehicles that remain defective despite repeated repair attempts. Many of these car owners do not realize that New Jersey’s Lemon Law (N.J.S.A. 56:12-29 to 56:12-49 for new cars and N.J.S.A. 56:8-67 to 56:8-80 for used cars) provides a clear legal remedy to protect consumers from defective vehicles.

For buyers who have purchased or leased a vehicle that repeatedly fails to function properly, New Jersey’s Lemon Law offers several forms of compensation. If a manufacturer or dealer is unable to fix a significant defect within a reasonable number of repair attempts, consumers may be entitled to a refund, a replacement vehicle, or reimbursement for related expenses.

This article explains the potential remedies and compensation options available under New Jersey’s Lemon Law. It will outline who qualifies, what compensation includes, how refunds and replacements are calculated, and what to do if a manufacturer refuses to comply. If you’re struggling with a defective vehicle, understanding these options can help you take the necessary steps to resolve your case and file a claim for the compensation you deserve.

The Two Main Remedies Under NJ Lemon Law

When a vehicle qualifies as a lemon under New Jersey’s Lemon Law, the car owner has two primary options for compensation: a full refund or a replacement vehicle. Each option has specific considerations, and the best choice depends on the consumer’s situation and preferences.

Refund Option

Car owners who choose the refund option will receive a full refund of the purchase price, including:

• The original purchase or lease price of the vehicle.
• Any taxes, registration fees, and other costs paid at the time of purchase.
• Loan payments and interest (if applicable).
• Any manufacturer-installed options included in the vehicle.

However, the refund is subject to a mileage-based deduction, calculated using a formula set by New Jersey law. This deduction accounts for the miles driven before the first repair attempt for the defect.

Replacement Vehicle Option

Instead of a refund, the manufacturer may offer a replacement vehicle of the same make and model. The replacement must:

• Be substantially identical to the original vehicle.
• Include similar features, trim level, and options.
• Come with a new factory warranty to ensure defect-free operation.

When Do Owners Choose Refunds vs. Replacements?

Choosing between a refund or replacement depends on several factors:

• Personal preference – Some consumers prefer a refund to buy a different vehicle.
• Availability – If a comparable replacement is not available, a refund may be the only option.
• Time constraints – A refund may be processed faster than waiting for a replacement vehicle.

Ultimately, the decision comes down to what best suits the consumer’s needs and circumstances.

Full Refund – What’s Included?

For car owners who qualify for a refund under New Jersey’s Lemon Law, the manufacturer must compensate them for the full purchase price, minus a mileage-based deduction. This refund includes several key expenses associated with the vehicle purchase.

What Is Covered in a Refund?

A full refund under N.J.S.A. 56:12-29 to 56:12-49 (for new cars) and N.J.S.A. 56:8-67 to 56:8-80 (for used cars) includes:

• The original purchase or lease price of the vehicle.
• Sales tax, registration fees, and title fees paid at the time of purchase.
• Loan payments and interest made before the refund is issued.
• Any manufacturer-installed options that were included in the original purchase.
• Repair costs related to the defect.
• Reasonable costs for a rental vehicle while the car was out of service due to the defect.
• Towing expenses if the vehicle required towing because of the defect.
• Expert witness fees if expert testimony was necessary to support the Lemon Law case.

However, the refund does not cover dealer add-ons, extended warranties, or aftermarket modifications made after the vehicle’s purchase.

Mileage Deduction Formula

New Jersey law allows the manufacturer to deduct a reasonable use fee based on the miles driven before the first repair attempt. The formula is:

Purchase Price × (Miles at First Repair Attempt ÷ 100,000) = Use Deduction

Example Calculation:

• Car Purchase Price: $35,000
• Miles at First Repair Attempt: 12,000
• Deduction Calculation: $35,000 × (12,000 ÷ 100,000) = $4,200
• Refund Amount: $35,000 – $4,200 = $30,800

How Long Does It Take to Get a Refund?

The refund timeline depends on whether the manufacturer disputes the claim. If the claim is approved without challenge, consumers may receive their refund within a few weeks. However, if the manufacturer contests the claim, the process can take several months and may require legal action or arbitration.

Replacement Vehicle – How It Works

For consumers who prefer not to receive a refund, New Jersey’s Lemon Law allows them to opt for a replacement vehicle. This option provides a new, defect-free car in place of the defective one. However, certain conditions apply to ensure that the replacement is fair and equivalent to the original purchase.

How Manufacturers Provide a Replacement Vehicle

When a manufacturer offers a replacement, the new vehicle must:

• Be substantially similar to the original lemon vehicle.
• Have the same make, model, trim level, and factory-installed features.
• Include any standard warranties that come with a new vehicle.

The replacement process is typically coordinated through the dealership, and the consumer should not be responsible for additional costs such as taxes, registration, or dealer fees.

Benefits and Drawbacks of Choosing a Replacement

• ✅ No out-of-pocket losses – The consumer receives a new vehicle without additional expenses.
• ✅ Get a brand-new, defect-free vehicle – Comes with a fresh warranty, ensuring reliability.
• ❌ Availability issues – If the same make and model are unavailable, the process can be delayed.
• ❌ Limited choice – Some consumers prefer to receive a refund so they can purchase a different vehicle.

What If No Comparable Replacement Is Available?

If the manufacturer cannot provide a substantially similar replacement, they must instead issue a full refund (minus the mileage deduction). This ensures that consumers are not left with a defective car or forced into an unfair settlement.

Additional Compensation Available

In addition to receiving a refund or replacement vehicle, New Jersey’s Lemon Law provides extra compensation for certain expenses related to the defective car. These reimbursements help car owners recover out-of-pocket costs and, in some cases, legal fees.

Reimbursement for Out-of-Pocket Expenses

Car owners may be eligible for reimbursement of costs incurred due to the vehicle’s defect, including:

• Rental car costs – If the lemon vehicle was out of service, and the owner had to rent a car while waiting for repairs.
• Towing fees – If the defect caused a breakdown, requiring the car to be towed to a repair facility.
• Repair costs – If the owner paid for unsuccessful repairs before realizing the car qualified as a lemon.

To receive these reimbursements, car owners should keep all receipts and submit them along with their Lemon Law claim.

Attorney’s Fees for New Cars

For new car Lemon Law claims (N.J.S.A. 56:12-29 to 56:12-49), the manufacturer must cover the consumer’s attorney’s fees if the claim is successful. This provision ensures that car owners can afford legal representation without paying out-of-pocket.

Does the Used Car Lemon Law Cover Attorney’s Fees?

For used cars covered under N.J.S.A. 56:8-67 to 56:8-80, the Lemon Law does not require manufacturers or dealers to pay attorney’s fees. However, consumers may still recover legal costs by filing a separate lawsuit for damages under consumer protection laws.

What Happens If the Manufacturer Refuses to Pay?

If a manufacturer fails to comply with a New Jersey Lemon Law ruling, they can face serious legal consequences. The law is designed to ensure that consumers receive fair compensation without unnecessary delays.

Legal Penalties for Non-Compliance

• Manufacturers who refuse to honor a Lemon Law decision can be fined up to $5,000 per day until they fulfill their legal obligations.
• If a court determines that the manufacturer acted in bad faith by intentionally delaying or refusing payment, the refund amount may be increased as a penalty.

This ensures that car owners are not unfairly pressured into accepting lower settlements.

Options for Consumers If the Manufacturer Delays Payment

If the manufacturer fails to pay within a reasonable time, consumers have legal options to enforce the ruling:

• File a lawsuit in New Jersey Superior Court – A court order can compel the manufacturer to comply with the ruling.
• Request additional damages – Consumers may be entitled to further compensation if the delay caused them financial hardship or inconvenience.

How Often Do Manufacturers Comply?

Most manufacturers settle quickly after a Lemon Law ruling to avoid fines and additional penalties. However, some may delay payment to pressure consumers into accepting lower settlements. If this happens, it is critical to pursue legal enforcement to ensure full compensation under the law.

Can You Sue for Additional Damages?

In some cases, a consumer may be entitled to additional compensation beyond the standard refund or replacement provided under New Jersey’s Lemon Law. This typically applies when the manufacturer has acted in bad faith or the defective vehicle has caused significant financial or personal harm.

When Can a Consumer Seek More Compensation?

A car owner may sue for additional damages if:

• The manufacturer deliberately delayed payment or falsely denied a valid claim.
• The vehicle’s defect caused injuries or led to financial losses beyond what the Lemon Law covers.
• The consumer suffered financial hardship due to the manufacturer’s failure to comply with the law.

Types of Additional Damages

In cases where a manufacturer’s bad faith actions caused harm, a court may award:

• Punitive damages – Awarded in extreme cases where the manufacturer’s actions were particularly reckless or deceptive.
• Emotional distress compensation – If the car’s defects led to significant stress, inconvenience, or hardship.
• Loan interest or penalties – If the car was financed and the consumer incurred additional costs due to the delay in resolving their case.

While New Jersey’s Lemon Law primarily focuses on refunds and replacements, additional damages may be available through a separate lawsuit under consumer protection laws if the manufacturer’s actions were unfair or deceptive.

Additional Details:
New Jersey Lemon Law Information