Calculating the Mileage Offset

If have purchased a car that turns out to be a lemon, you may be entitled to relief under California law. The Song-Beverly Consumer Warranty Act, more popularly known as the California Lemon Law, provides relief to certain consumers who have purchased or leased a vehicle that is unable to be fixed despite repeated repair attempts by the dealer or manufacturer.   In order for a consumer to take advantage of the California Lemon Law protections, the new or used car must have been purchased within the state and the repairs must have occurred within the vehicle’s warranty period.   While California law does not require a specific number of repair attempts before seeking relief, the consumer must give the manufacturer or dealer a “reasonable number” of opportunities to fix the car’s defect.

If your automobile qualifies as a lemon under California law, you will be entitled to legal relief. The car manufacturer will be required to refund your down payment and monthly finance payments and pay off the outstanding balance of your vehicle loan in full. You may also receive certain incidental expenses, such as repair costs, towing, and rental car expenditures.   Instead of having your money refunded, you may elect to receive a comparable replacement vehicle when such a replacement is offered by your manufacturer. Furthermore, if you have hired a Los Angeles Lemon Law lawyer or an attorney in any other part of California to handle your Lemon Law claim, the automobile manufacturer will be required to pay for your reasonable attorney’s fees and costs.

When a manufacturer is obligated to repurchase your defective vehicle, the manufacturer will be allowed to deduct a small credit for the mileage you have placed on the car before it was first taken into an authorized dealer to repair the defect. The California Lemon Law (California Civil Code Section 1793.2(d)(2)(C) ) sets forth a specific formula as to how the manufacturer’s credit, known as the “mileage offset,” must be calculated. This is how the formula works:

Mileage Offset = (Purchase price of vehicle) x (Number of miles driven at first repair attempt ÷ 120,000 miles)

For example, if you actually paid $30,000 for your new car and had driven it 4,000 miles when you first brought it into the dealer to fix the defect, the mileage offset would be $1,000. ($30,000 x 4,000 = 120,000,000. 120,000,000 ÷ 120,000 = 1,000). This means that under these circumstances, the manufacturer would be permitted to deduct a $1,000 credit for the “good use” that you made of your vehicle before it was first brought into the dealer to correct the problem. Most often, this deduction is substantially lower than actual depreciation. It’s also important to note that the offset is based on your first repair visit, no matter the vehicle’s current mileage. Calculation of the offset can be complicated, and there is often confusion which figures to use for the purchase price, or the “amount paid or payable.” It’s best to call a qualified attorney to discuss the mileage offset and your potential recovery. Consultations with our office are free, and we are happy to break down the recovery sought including the mileage offset deduction before people retain our office.

While most calculations are generally straightforward, there are times when an automobile manufacturer may attempt to inflate the number of “good use” miles a consumer has driven in order to increase the offset deduction. It is important to remember that your mileage offset deduction will be calculated based upon the number of miles you have driven the car at the time you first bring it to the dealer for a repair, and not at the time of the buyback award. If you live in Los Angeles have questions about a mileage offset deduction, you should contact a skilled Los Angeles lawyer who can carefully explain how the mileage offset formula may impact your Lemon Law recovery. Our firm represents consumers across all of California and we are happy to explain the offset as a part of our free consultation.