Question:  What do you think of buying a car that was declared a "Lemon?"

July 15, 2004

Dear Tony,

I found a lot of useful tips on your website.

Recently I came across a vehicle for sale that had a manufacturer's buy-back lemon title.  It was a loaded 1999 Acura TL that appeared to be in great shape with 90,000 miles.  The lemon law paperwork stated that the repairs that caused the car to be bought back were due to a malfunction in the navigation system. The dealership was selling the car for approximately 50% of it normal value.

What do you think about buying a vehicle with a manufacturer's buy-back title? Is it ever a good idea?  What about when the defect was not in the engine or transmission as in this case?  The dealer claims that the defect has been fixed and offered me a 1 year 12000 mile warranty on it.

The deal seemed too good to be true.

Do you know where I could find the vehicle's value with the buy-back title?  What is it worth now?  What would an insurance co. pay me for it in the event that it was totaled in a car accident?

If you have time to let me know if you have any info on these sort of vehicles please email me back.

Thank You

Jeneen

Answer:

Hi Jeneen,

I don't know Jeneen, usually if something seems too good to be true it usually is!

The fact that the car has 90,000 miles on it indicates that someone apparently got some use out of it.  Then again, how much life does it have left?  The navigation system is a very complicated system, but not necessarily a vital system to the performance of the car.  So even if it messes up you can probably still live with the car providing the rest of it is in good shape.

I've seen people have the manufacturer buy back vehicles for the smallest of problems.  Usually the factory will accommodate them just to get them off their backs.  Then again, some cars are legitimate lemons with serious problems.

When the factory buys a vehicle back from an owner they simply take the car to a dealer auction and sell it to a dealer.  Of course, they have to disclose to the dealer that it is a lemon and what the problems are.

The fact that the dealer is selling it to you so cheaply indicates that he either bought the car dirt cheap, or he can't get rid of it and he's getting desperate. Neither one of these scenarios inspires much confidence in the car.

I don't know of any source that can give you a value of such a car.  However, when it comes time to sell it or trade it you probably can't expect to get much for it.

As far as the insurance value goes I would suggest you check with a reliable insurance agent.

Personally Jeneen, I don't get a good feeling about this car.   If it was me I'd pass.  You never know for sure though.  If you decide to buy it make sure the dealer gives you a warranty that covers the entire car...especially the navigation system.  And make sure you have it in writing in plain English.  Read the warranty very carefully.  Especially the fine print.  There aren't too many warranties out there that are worth the paper they're written on.

You might ask the dealer if you can test drive the car overnight or even better, over a weekend.  Get a feel for the car.  See what your gut is telling you about it. And also have it looked at by a mechanic that you trust.  If the dealer isn't willing to do these things at a minimum I'd say tell him to keep the car and move on for sure.

Good luck Jeneen...

Tony Iorio

Response to My Answer:

Thank You for answering my email so quickly.  I am still considering whether or not to buy that vehicle.  I will call my insurance agent and ask them about the value as you suggested.  I looked at the CARFAX Report and saw that the car was bought back at 9000 miles, and then sold at an auction.  Someone bought it and drove it for 70000 miles, they traded it in at the dealership that has it now. That dealership has had it for a few months and they have put a lot of miles on it.

They are selling it now for what seems like a good price.  They offered me a 12 month 12,000 mile warranty for $1,800, but I declined.  Then they let me know about the title.  I left shortly after!

If the insurance co. says that the value is comparable to the price then I will call back and ask for a free warranty.  I feel that if they really stand behind the car's quality that they will be willing to warranty it for free or less than $1,800.

Thanks again for answering me back.  You have a great website!

Jeneen