Indiana's Used Car Lemon Laws

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Each year, approximately 1 percent of cars sold in the United States are "lemons," meaning they have immediate significant and unfixable problems. Because of this, each state has its own lemon law, which helps purchasers get a refund or replacement if they have an inoperable vehicle on their hands. These laws differ from state to state. Indiana lemon laws cover both new and used cars as long as there is a warranty in place. If an individual sells a car that is still under warranty, the state's lemon law would apply.

Defining a Lemon

Most states have lemon laws in place, which mainly cover new cars. However, some states, like Indiana, cover used cars as well. To qualify as a lemon, a car must show a "substantial" defect under warranty that occurs within a specific time after purchase and be inoperable or unrepairable after a reasonable number of attempts to fix it.

Substantial defects include those that impede a vehicle's use, value or safety, such as steering problems or faulty breaks. They do not include broken door handles, mirrors or other minor cosmetic defects, but the line is not always clear. Something that seems minor, like an unusual odor, could be more significant upon a deeper inspection. Whatever the defect is, it cannot stem from abuse to the car by the purchaser.

Defining a Reasonable Fix

Before anyone deems a vehicle to be a lemon, a car dealer or manufacturer should make a reasonable number of attempts to fix the problem. The number of repair attempts varies from state to state. Usually, at least one of these elements must be valid for consumer protection under a state's lemon law:

  • Significant defects must remain unfixed after reasonable attempt at repairing them.
  • If something isn't a critical safety defect, but fixing it isn't possible after three or four attempts, the vehicle may be a lemon.
  • If a car is at a mechanic's shop for a specific period of time (from 30 days to one year, depending on the state) to fix substantial defects under warranty, it may be a lemon.

Coverage for Personal Use Vehicles

Indiana's lemon law, known formally as the Motor Vehicle Protection Act of 1988, covers used vehicles bought or leased for personal use only, and the used vehicle:

  • Is a car or light truck.
  • Has significant defects within 18 months of its original purchase.
  • Has less than 18,000 original miles.
  • Vehicle comes from a dealer in Indiana

After Purchasing a Lemon

Indiana vehicle owners who believe their car is a lemon that qualifies under the law must take it to an authorized dealer for repair and allow them to make a reasonable number of attempts at fixing it. In this state, there must be at least four attempts to fix the vehicle or it must be out of service for a minimum of 30 days as a result of the problem. Vehicle owners should request a copy of their repair orders every time they take the car in. It is also important that they refer to the owner's manual or vehicle warranty for the following information:

  • To know if the vehicle's manufacturer requires written notice regarding the problem. If it does, the owner must send it and copies of their repair orders to the vehicle manufacturer.
  • To know if the manufacturer used an informal dispute procedure certified by the Indiana attorney general's office. Claimants must follow the guidelines of this procedure to file a lawsuit.
  • If there is no notice requirement or informal dispute procedure in place, the vehicle owner can file without notifying the manufacturer of the lawsuit.

The vehicle manufacturer has up to 30 days to accept the car's return and either replace it or refund money to the purchaser. If the manufacturer leaves the claim unresolved, the purchaser has up to two years to file a lawsuit from the day they first reported the vehicle's problems. If they win the case, they can recoup their costs, including attorney's fees.

Repurchased or Replacement Vehicles

When the manufacturer receives or repurchases a defective vehicle, they must obtain a new vehicle title. It should read "Manufacturer Buyback-Disclosure On File," placed on the title with a brand or stamp. This statement must remain on the car title going forward. When a dealer attempts to sell it, they must provide the new purchaser with written documentation explaining the repurchase or replacement details under the state's lemon law and a manufacturer's warranty for 12 months or 12,000 miles.

Those who fail to comply with lemon law buy-back disclosure and branding requirements may face legal enforcement by the state attorney general's office. However, the law does not allow the attorney general to represent purchasers who seek a replacement vehicle or refund.

Indiana's Used Car Bill of Rights

Owners of used vehicles in the state of Indiana have a Bill of Rights when they make a purchase. They have the right to:

  • The negotiation of the deal, which includes price, the car's trade-in value and financing terms.
  • A mechanic of their choosing to check out the vehicle before they make the purchase.
  • Vehicle history reports before purchase that are separate from those provided by the dealer
  • Information on any past recalls.
  • Truthful advertising from the car dealership that honors what is in their ads and promotions.
  • Dealer notification if the car's title declares it salvaged, rebuilt or otherwise damaged. The vehicle must be seven years old or less.
  • Truthful information regarding a car's mileage.
  • The negotiation of the document preparation fee.
  • A Truth in Lending statement that details the financing amount, interest rate, finance charges and repayment plan.
  • The opportunity to say no to add-on items.
  • The opportunity to receive all elements of the deal in writing.
  • A full understanding of the paperwork and truthful statements about the vehicle throughout the transaction.
  • A valid title within 21 days from the purchase date and a full refund if the dealer does not deliver it within that time. (The purchaser must send written word to the dealer requesting the title. If the dealer does not deliver the title within 10 days of receiving the request, the purchaser is eligible for a refund.)
  • The opportunity to file a consumer complaint with the Indiana attorney general's office in the event of a violation of rights online at www.IndianaConsumer.com or by calling 317-232-6330.

Once purchasers sign the paperwork, they don't have the right to return the vehicle or back out of the sale. They are officially the vehicle's owner, even if they find mechanical problems after the purchase is completed. These rights do not guarantee that a car is free of mechanical defects.