A lemon law buyback is the refund remedy in California's Song-Beverly Consumer Warranty Act. The statute calls it "restitution," and it applies when a manufacturer can't fix a new vehicle's warranty defect after a reasonable number of attempts (our guide to California lemon law covers who qualifies). The manufacturer pays it, not the dealership, even though the dealer's service department is where the failed repairs happened.
You pick the refund. A replacement is the other option.
Under Civil Code section 1793.2(d)(2), a manufacturer that owes a remedy must either replace the vehicle or make restitution, and the same sentence gives the buyer the deciding vote on the refund. You are "free to elect restitution in lieu of replacement," and the manufacturer can never require you to accept a replacement vehicle.
A replacement is a "substantially identical" new vehicle with the full warranties a new car of that kind normally carries. The manufacturer also pays the sales tax, license and registration fees tied to the replacement, plus incidental costs such as towing and rentals. Replacement still carries the mileage math, though. The statute makes the buyer pay the manufacturer the same use deduction described below, so a replacement can cost you something out of pocket. The Department of Consumer Affairs also notes that in state-certified arbitration a manufacturer can choose to repurchase even when a replacement was decided. A refund is the remedy you can insist on, and a replacement is one you can ask for.
What a repurchase pays back
Restitution starts with "the actual price paid or payable." In plain terms, that is what you have paid toward the car plus what you still owe on it. The statute then adds government charges and certain out-of-pocket losses, and it leaves a few items out.
| Usually included | Usually not included |
|---|---|
| Your down payment | Accessories that a dealer or you installed and the manufacturer did not (aftermarket wheels, tint, a dealer-added lift kit) |
| Monthly payments made and the loan balance still owed | The use deduction for miles driven before the first repair visit for the defect |
| Destination (transportation) charges and factory-installed options | For opted-in manufacturers: third-party add-ons and negative equity (see below) |
| Sales or use tax, license and registration fees, other official fees | |
| Reasonable repair, towing and rental car costs you actually paid |
Finance charges are a common question. A California appeals court held in Mitchell v. Blue Bird Body Co. (2000) that finance charges the buyer has actually paid can be recovered as part of restitution. Interest you haven't paid yet is a different question, covered in the loan section below. Keep receipts for towing, rentals and any repair bills tied to the defect, because the statute reimburses costs "actually incurred," and a receipt is how you prove one.
Separately, section 1794(c) lets a court add a civil penalty of up to two times actual damages when a manufacturer's violation was willful. That is decided in a contested case, it is not part of a standard buyback calculation, and no one can promise it.
The use offset and the 120,000-mile formula
The manufacturer "may" reduce a refund for the miles you drove before the problem first reached the shop. Section 1793.2(d)(2)(C) spells out the formula. Take the odometer reading from the first time you delivered the car for repair of the defect, divide it by 120,000, and multiply the result by the price paid or payable for the vehicle, including transportation charges and factory options.
Say your SUV's price, with destination and a factory package, was $43,860. The repair order from your first visit for the transmission problem shows 7,412 miles.
- 7,412 ÷ 120,000 = 0.06177
- 0.06177 × $43,860 = about $2,709
That $2,709 is the most the manufacturer can subtract for use, and miles you drive after that first visit don't add to it, however long the claim takes.
A few details decide the size of the offset. The starting point is the first visit for the problem at issue, so an earlier oil change or a visit for an unrelated issue doesn't set the number. The mileage comes from the repair order itself, which is one reason the wording on that first order matters (see how repair attempts are counted). The statute makes the deduction optional for the manufacturer, but plan on it being claimed. You can run your own numbers in the lemon law buyback calculator.
What happens to your car loan
Most buybacks involve a loan, and the money usually moves in two directions. The manufacturer pays your lender what it takes to close out the loan. It pays you what you have already put in (the down payment and the monthly payments), plus taxes, fees and incidental costs, minus the use offset. Once the payoff clears and you return the car, you are finished with that vehicle.
Until that day, the loan is still yours. The lender isn't part of the lemon law claim and expects payments as usual, and the payments you make while the claim is pending become part of the price paid. Missed payments can damage your credit and lead to repossession, which complicates a buyback badly.
For manufacturers on the state's opt-in list, Code of Civil Procedure section 871.27 adds specific timing rules. The manufacturer doesn't pay interest that would never be owed once the loan is paid off. It must complete an agreed buyback within 30 days after it receives a signed release from your lawyer, or pay a $50-per-day penalty unless the parties agree otherwise or the consumer caused the delay. It also has to hand over your restitution money when you return the car and send the loan payoff within one business day.
Leases follow the same idea with different paperwork, and opted-in manufacturers have special rules for lease extensions and residual payments. Our page on leased car lemon law covers how a lease is closed out.
Already traded in or sold the car?
Plenty of owners give up on a car before they call a lawyer, and that doesn't erase the claim. In Niedermeier v. FCA US LLC (2024), the California Supreme Court held that neither a trade-in credit nor sale proceeds reduce the restitution owed, at least where the consumer was forced to trade in or sell because the manufacturer failed to comply with the law. The lower court in that case had cut the award by a $19,000 trade-in credit, and the Supreme Court reversed.
Selling first can still cost you something else. If your manufacturer opted in and you want to keep the option of civil penalties, the pre-suit notice rules require you to have the car when you send the notice and to keep it for at least 30 days after the manufacturer receives it. If no offer arrives in those 30 days and you then sell, you must give the buyer written notice of your claim before the sale or lose the penalty claim. If an offer does arrive, the hold lasts 60 days. Talk to a lawyer before you hand over the keys.
How the opt-in rules change the numbers
AB 1755 and SB 26 created a separate set of procedures that apply only to manufacturers that chose them. Our page on the 2025 lemon law changes tracks the state's list. For those manufacturers, section 871.27 changes three parts of the calculation:
- Third-party add-ons. Service contracts, extended warranties, GAP coverage, theft-deterrent devices and similar products bought from a third party during the sale are offset. The same products supplied by the selling dealer stay recoverable.
- Negative equity. If you rolled $6,200 you still owed on your old car into the new loan, the manufacturer can deduct that $6,200.
- Rebates. A manufacturer rebate used as down-payment help is not counted as part of the price you paid, and it can't be used to shrink the negative-equity offset.
Section 871.27 does not apply to manufacturers that stayed with the older rules. For those cases, how a rolled-in balance or a third-party product is treated depends on the contract and the facts. Bring the complete sales paperwork to any review.
Cash-and-keep settlements
Some claims end without a buyback at all. In a cash-and-keep settlement, you keep the vehicle and the manufacturer pays you an agreed amount to resolve the claim. It is a negotiated alternative, not a remedy written into the statute, so no formula sets the number. Some owners prefer it when the defect is livable or a repurchase would leave them without a car they otherwise like. The written settlement controls the details, including which claims you release and what happens if the defect gets worse. Because the manufacturer doesn't take the car back, the retitling duty described next, which is triggered when a manufacturer reacquires a vehicle, generally doesn't apply.
The "Lemon Law Buyback" title brand
A repurchased car doesn't go back on a lot with a clean history. Civil Code section 1793.23(c) requires a manufacturer that reacquires a vehicle under the lemon law to retitle it in the manufacturer's name, ask the DMV to inscribe the ownership certificate with the notation "Lemon Law Buyback," and attach a decal to the car before it is sold, leased or transferred in California. The manufacturer, and any dealer who knows the history, must give the next buyer a written notice and get a signed acknowledgment. Anyone who later sells a car with that brand must give the buyer a signed disclosure that it "WAS REPURCHASED BY ITS MANUFACTURER DUE TO A DEFECT." Those duties belong to the manufacturer and later sellers, not to you.
Before you ask for a repurchase
Pull together the purchase or lease contract, your latest loan statement with the payoff amount, every repair order, and receipts for towing or rentals. With those in hand, the lemon checker can show whether the claim looks worth pursuing, and an attorney can check the offset and loan figures in a free case review.
Updated October 2, 2026
Common questions
Do I get my down payment back in a lemon law buyback?
Generally, yes. The down payment is part of the "actual price paid or payable," so it is included in restitution along with the monthly payments you made, subject to the use offset. If you rolled negative equity from an older car into the deal and your manufacturer opted into the 2025 procedures, that amount can be deducted under Code of Civil Procedure section 871.27(c).
What if the dealer didn't write down my problem on the first visit?
Then the manufacturer will likely point to the first repair order that does mention the defect, and the mileage on that order sets the offset. Other records can show you reported it earlier: appointment confirmations, texts or emails with the service advisor, or a later order noting when the problem started. Bring all of it to a lawyer, because a few thousand miles can move the offset by hundreds of dollars or more.
Can I keep driving my car while I wait for a buyback?
Usually, yes, and miles driven after the first repair visit for the defect don't count toward the use offset. Keep up with maintenance and insurance. If the defect makes the car unsafe to drive, don't drive it. Ask the dealer to tow it and keep the receipt. If your manufacturer opted into the 2025 procedures and you send a pre-suit notice, you also need to keep the car for a set period afterward.
How long does the manufacturer have to complete a buyback?
The statute says the manufacturer must "promptly" replace the vehicle or make restitution, without naming a number of days. For manufacturers that opted into the 2025 procedures, Code of Civil Procedure section 871.27(g) is more specific. An agreed buyback must be completed within 30 days after the manufacturer receives a signed release from your lawyer, or a $50-per-day penalty applies unless the parties agree otherwise or the consumer caused the delay.
Does a cash-and-keep settlement put a lemon brand on my title?
The retitling and "Lemon Law Buyback" branding rules in Civil Code section 1793.23 are triggered when a manufacturer reacquires a vehicle, and in a cash-and-keep deal the manufacturer doesn't take the car back. A settlement agreement can include its own terms, though. Read the release before you sign, and ask what, if anything, you would need to disclose if you sell the car later.