Lemon Law for a Leased Car When You Still Owe Money on the Lease

Yes, you can bring a lemon law claim on a leased car even though you still owe payments on the lease. California’s lemon law gives lessees the same rights as buyers. If the manufacturer cannot fix your leased vehicle after a reasonable number of attempts, it must replace it or make restitution. In a lease buyback, the manufacturer typically refunds what you have paid and pays off the leasing company directly, so you are not left owing the rest of the lease. Keep making your lease payments while the claim is pending.

Lessees have the same lemon law rights as buyers

Two parts of the Song-Beverly Consumer Warranty Act cover leases:

• Civil Code 1795.4(b) says a lessee has the same rights against the manufacturer that the lessee would have had if the goods had been purchased.
• Civil Code 1793.2(d)(2)(D) says that for the refund-or-replace rule, a buyer of a new motor vehicle includes a lessee of a new motor vehicle.

So the same tests apply. Within the first 18 months or 18,000 miles, Civil Code 1793.22 presumes the manufacturer had a reasonable number of attempts if the same problem was repaired four or more times, a defect likely to cause death or serious injury was repaired two or more times, or the car was out of service for warranty repairs more than 30 cumulative days. Outside the presumption, a car can still qualify based on its full repair history. Read more on whether California lemon law covers leased vehicles.

What happens to the money you still owe on the lease?

This is the main worry for most lessees: “If I still owe 20 more payments, do I have to keep paying for a car I gave back?” In a lease buyback, the answer is generally no. Here is how it typically works:

1. The manufacturer pays off the leasing company. The leasing company (often the manufacturer’s own finance arm) owns the car. The manufacturer settles the remaining lease obligation with the lessor.
2. You get back what you paid. Restitution under Civil Code 1793.2(d)(2)(B) is based on the actual price paid or payable, plus collateral charges like taxes and registration fees, and incidental damages like towing and rental costs. For a lease, that usually means your down payment or drive-off amount and the monthly payments you made.
3. A mileage offset may apply. The manufacturer may reduce the refund for use before the first repair visit for the problem, using the statutory formula of price times miles driven before the first repair visit, divided by 120,000.
4. You return the car and the lease ends. Once the repurchase is complete, you are no longer responsible for the remaining lease payments.

The exact numbers depend on your lease contract. Run your figures through our California lemon law calculator, then have a lawyer confirm them.

Replacement is also an option

Civil Code 1793.2(d)(2) lets you choose restitution instead of a replacement, and the manufacturer cannot force you to take a replacement. Some lessees prefer a substantially identical new vehicle. If you choose replacement, the statute requires the manufacturer to pay taxes and official fees tied to the replacement, plus incidental damages.

Keep paying your lease while the claim is open

It is tempting to stop paying for a car that does not work. Do not do it. Missed lease payments can lead to late fees, credit damage, and even repossession, and they can complicate your case. The buyback process accounts for the payments you make, so keeping current protects you. See do I have to keep making payments during a lemon law case?

What if my lease is about to end?

Lease-end timing deserves special care, because the leasing company and the manufacturer are separate parties with separate paperwork. Before you turn the car in or buy it out, talk to a lawyer. Returning the car at lease-end, buying it out, or extending the lease can each affect your claim and your numbers in different ways. Do not let a lease-end date push you into a decision without advice.

Also be careful about trading the car in early. Read selling or trading in during a lemon law claim.

What about excess mileage and wear charges?

Lessees often worry about lease-end charges for excess miles or wear. In a negotiated lease buyback, how those charges are handled is part of the settlement terms. Ask your lawyer to confirm in writing that the settlement resolves your obligations to the leasing company, so you do not get a surprise bill later.

Steps to take if your leased car keeps breaking down

1. Take it to an authorized dealer every time. Describe the problem clearly and make sure it is written on the repair order.
2. Keep every repair order, including visits marked “no problem found.”
3. Track days out of service. The 30-day count is cumulative across visits.
4. Keep your lease contract and payment records. These determine your refund.
5. Save receipts for rentals, towing, and any repairs you paid for.
6. Check for open recalls with our VIN recall checker. In our experience, a recall repair visit counts as a repair attempt, especially if you complained about the problem before the recall.
7. Contact the manufacturer directly and open a customer care case. Write down the case number.
8. Get legal advice early. In our experience, waiting too long is the biggest mistake, because the mileage offset is figured from the first repair visit for the problem.

Common lease situations

I leased a demo or loaner car

Civil Code 1793.22(e)(2) includes demonstrators and dealer-owned vehicles sold with a manufacturer’s new car warranty in the definition of “new motor vehicle.” A lease of one of these with a new car warranty may qualify. See what counts after Rodriguez v. FCA US.

I lease the car for my business

Business-use vehicles can qualify if they weigh under 10,000 pounds gross vehicle weight and are owned or used by a person or business with no more than five vehicles registered in California. Read business and rideshare vehicles under the lemon law.

My leased car is electric

EV leases are covered the same way. Battery, charging, and software defects can all count. See EV lemon law in California.

Get help with your lease claim

A lease claim follows the same law as a purchase, but the paperwork and payoff steps are different. A California lemon law attorney or a Los Angeles lemon law attorney at our firm can review your lease and repair history. You pay nothing, win or lose. We are paid only if you win, and the manufacturer pays our fees, including in settlements. If a case is lost, our firm covers the costs.

Call 877-536-6620 for a free case review, in English or Spanish.

Frequently Asked Questions

Can I file a lemon law claim on a leased car?

Yes. Civil Code 1795.4 and 1793.2(d)(2)(D) give lessees of new motor vehicles the same lemon law rights as buyers.

Do I have to pay the rest of my lease if my car is a lemon?

In a lease buyback, the manufacturer typically pays off the leasing company and refunds what you paid, less any mileage offset, so you are not left owing the remaining lease payments.

Should I stop making lease payments during my claim?

No. Keep paying to avoid late fees, credit damage, and repossession. The payments you make are accounted for in a buyback.

What if my lease ends before my case is resolved?

Talk to a lawyer before you return the car, buy it out, or extend the lease, because each choice can affect your claim.

Can I choose a replacement car instead of a refund?

Yes. You can choose replacement or restitution, and the manufacturer cannot force you to take a replacement.

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