In the several years it takes to resolve a lemon law claim, the lender won't waive payments, which may destroy your credit rating or lead to repossession if you don't continue to make payments. In some states, the lender holds a lien against the car's title. In other states, the lender actually holds title to the car until the loan is paid off in full. Yet the lemon law requires that the consumer return the vehicle in exchange for replacement or refund, and returning the vehicle includes turning over a clean title. Whether the consumer received financing from the dealer or from an independent lender can play an important role in a lemon lawsuit.
Independent financing is arranged directly by consumers through their own bank or credit union.
Dealer financing Dealer financing includes loans actually financed by the dealer and loans arranged or assisted by the dealer at the time of sale. Dealers often arrange loans with local banks or the finance companies that are subsidiaries of the manufacturer, such as Ford Motor Credit Corporation, General Motors Acceptance Corporation, Chrysler Credit or Toyota Motor Credit Corporation. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder. This means that if the dealer arranged your car loan, you can name the lender as a defendant in your lemon law claim. Leased cars For leased cars, the analysis is a little different.