You signed a lease expecting lower payments and a worry-free experience with a new car.
Instead, you’re dealing with constant repairs and a vehicle that doesn’t work properly.
If you think you’re stuck because it’s “not your car,” you’re wrong.
California’s lemon law covers leased vehicles just as strongly as purchased ones—sometimes even more favorably.
Here’s what you need to know.
Your Rights as a Lessee
The Song-Beverly Consumer Warranty Act explicitly protects people who lease vehicles.
To qualify for protection, your leased vehicle needs:
- An active manufacturer’s warranty (standard on new leases)
- A substantial defect affecting use, value, or safety
- Documented repair attempts that failed to fix the problem
- Problems reported while still under warranty
The law works in lessees’ favor in several ways.
Your lease payments create clear documentation of damages, and you don’t own a depreciated asset—giving you more negotiating power.
However, like buyers, you will face a mileage offset deduction based on usage before the first repair attempt.
Understanding the Three-Party Dynamic
Lease situations involve you, the dealer, and the leasing company.
The manufacturer remains responsible for warranty defects, regardless of who owns the vehicle.
While the leasing company holds title, you have independent rights to pursue lemon law claims.
Don’t let anyone tell you otherwise.
Many people wrongly assume they can’t take action because they don’t own the vehicle, or that only the leasing company can sue.
Both assumptions are false.
You have full standing to pursue your claim, and every payment you’ve made counts toward potential damages.
What You Can Recover
When your leased vehicle qualifies as a lemon, you have several remedy options:
Lease Termination and Refund
The manufacturer buys out your lease and returns your payments—monthly payments, down payment, registration, taxes, plus expenses like towing and rental cars.
You’ll avoid early termination penalties, excess mileage charges, and remaining obligations.
However, the manufacturer will deduct a mileage offset for usage before the first repair attempt.
Cash and Keep
You continue the lease but receive cash compensation for the diminished value.
This works when defects are annoying but don’t make the vehicle unusable.
Vehicle Replacement
The manufacturer provides a comparable new vehicle with fresh lease terms, often the fastest solution when available.
Buyout Option
You can force the manufacturer to let you purchase the vehicle at the predetermined lease-end value, often resulting in ownership at below-market cost.
Calculating Your Damages
For a typical lease termination, you’ll recover all monthly payments made, your down payment, registration and fees, plus incidental costs like towing and rentals—minus a mileage offset.
The mileage offset is calculated using this formula: (Miles at first repair attempt ÷ 120,000) × Purchase/lease price.
This deduction represents your usage of the vehicle before problems began.
For example, let’s say that you lease a BMW for $450 monthly.
After eight months and multiple failed repairs, it qualifies as a lemon.
You’d recover $3,600 in payments, your $2,500 down payment, $800 in fees, and $1,200 in towing/rental costs—totaling $8,100.
If you drove 5,000 miles before the first repair attempt on a $35,000 vehicle, the offset would be $1,458, leaving you with $6,642 plus attorney fees.
Both leased and purchased vehicles are subject to this mileage offset formula.
The key is documenting when you first brought the vehicle in for the defect—that mileage determines your deduction.
Common Problems in Leased Vehicles
First-year production models frequently have unresolved manufacturing issues.
Advanced driver assistance systems, infotainment centers, and electronic controls in newer vehicles fail at higher rates.
Powertrain problems—especially in redesigned engines, new transmissions, or hybrid/electric systems—create strong lemon law claims.
Document how these defects impact your daily use, any safety concerns, and all additional expenses incurred when the vehicle is unavailable.
Working With Manufacturers
Manufacturers often prefer buying out leases rather than replacing vehicles.
They might offer extended warranties or “goodwill” assistance to avoid admitting liability.
Common defenses include claiming problems are normal “break-in” issues, promising future software fixes, or blaming maintenance.
Your leasing company can sometimes help by providing documentation, pressuring the manufacturer through their business relationship, or offering alternative solutions.
However, they might also slow things down with approval processes or resist cancellation due to their own manufacturer agreements.
Strategic Considerations
Track how defects interfere with getting value from your lease payments.
If you use the vehicle for business, document productivity losses.
Calculate what you’d save by avoiding early termination penalties.
Consider timing—most leases fall entirely within warranty periods, giving you protection throughout.
Act quickly once problems arise.
Report issues immediately in writing, keep detailed service records, and document all communications.
The sooner you build your case, the stronger your position.
When You Need an Attorney
Consider legal representation for luxury vehicle leases, complex or safety-related defects, manufacturer resistance, or disputes involving multiple parties.
Attorneys can coordinate between the manufacturer, dealer, and leasing company while maximizing your recovery.
Most lemon law attorneys work on contingency, and California law often requires manufacturers to pay your attorney fees if you win.
Professional representation typically increases settlement values beyond what individuals achieve alone.
Protecting Yourself
Before leasing, research the specific model’s reliability history, check for recalls or investigations, and review consumer reports.
During lease signing, ensure the warranty is properly assigned to you and understand defect reporting procedures.
From day one, document the vehicle’s condition at delivery, immediately report any problems in writing, and maintain organized records of all service visits.
The Reality of Your Rights
Leasing doesn’t weaken your consumer protections.
You have the same fundamental rights as buyers, including lease termination without penalties and multiple settlement options.
While you’ll face a mileage offset like purchasers, the law still strongly protects lessees.
Don’t let anyone convince you that “it’s just a lease” means you’re stuck. California law provides clear remedies for defective leases.
Document everything, know your options, and get the reliable transportation you’re paying for.
Get Help With Your Lemon Law Claim
If you believe your leased vehicle qualifies as a lemon after reading this article, don’t wait.
Call us at (818) 254-8413 for a free consultation.
We’ll review your case, explain your rights, and help you get the compensation you deserve.
