What is the Lemon Law in Canada?

Updated

By

Reviewed by

Share:

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Unlike the U.S, Canada currently does not have a lemon law; however, there are measures and alternatives to aid people who purchased a defective vehicle, whether new or used. Some people buy cars and discover later that the car has some issues.

This is relatively uncommon with new vehicles and quite common with used cars; these issues might be due to manufacturer error or prolonged use. Whatever the case may be, if you purchase a car and notice it is defective, there are some measures you can take to recover your money.

What is the Lemon Law

The term lemon is often used to describe a car with a manufacturer’s defect that can hinder its safety, use or value. The lemon law provides consumers with a legal alternative in a case where the purchase or lease of a car turns out to be defective.

The law applies to both new or used vehicles and comes with a warranty that the vehicle will be free of defects for a period and/or a distance driven. Generally, the lemon law states that the car’s issue must be minimal; else, the law requires the manufacturer to replace the vehicle or refund payment. 

Once a manufacturer or dealership cannot repair the car after it has been in the repair shop for an excessive number of times or days, the car gets the lemon label. Although Canada does not have a federal lemon law, Nova Scotia and Manitoba have passed laws referring to lemons, even though they do not suit the bill.

Both provinces would need a car dealer to provide prospective buyers with details of the car’s history instead of providing consumers protection should the car turn out to be a lemon.

The Nova Scotia law requires dealers to tag a defective or damaged car as lemon and inform potential buyers about it was passed in 2010; however, it is yet to be proclaimed.

On the other hand, Manitoba’s law which took effect at the end of 2011, requires dealers to state if the car has been declared a lemon in other provinces. 

Qualities of a Lemon Car

Generally, a lemon car is any vehicle that has some mechanical or electrical issues that affect its performance, safety and resale value. Cars that fall under this term are constantly in need of repairs and usually sold cheaply. Below are some of the common defects lemon cars can have:

  • Manufacturer error
  • A Collison or incident that affects the car’s durability
  • Falsified or undisclosed vehicle history
  • Tampered odometer
  • Recurring brake issues
  • Lack of proper vehicle documentation
  • Transmission problem
  • Engine/suspension problem
  • Undiagnosed issues 

Alternatives to Leman Law in Canada

Buying a lemon car can be a painful and expensive experience, especially if it’s an expensive vehicle or your only means of transportation. Fortunately, there are some alternatives you can use to resolve this issue both financially and legally, such as:

  • CAMVAP

The Canadian Motor Vehicle Arbitration Plan (CAMVAP) is a free program where a mediator contracts the source of your lemon car on your behalf. The arbitrator negotiates with the manufacturers to have your repairs sorted, poor maintenance covered, and, if needed, getting them to repurchase the car.

While CAMVAP covers about 90% of vehicles sold in Canada, they have their set requirement that your lemon car must pass to be eligible for the program. The requirement includes:

  • The car must be more than four years old.
  • It must have been sold to you by the manufacturer
  • The vehicle must have less than 160,000 km on the odometer
  • It must have a prolong undetected damage or maintenance issues
  • A participating manufacturer must produce the car – note that some specific car brand and model does not qualify

Bear in mind that all agreements with CAMVAP are legally binding. That is, your final settlement cannot be altered or disputed even in court.

  • Small Claim Court

You can take the dealer or manufacturer to court. This is an expensive alternative and can be time-consuming. However, the source of your lemon car will have to reach an agreement with you. The court may allow them to pay a small settlement to cover any repairs cost instead of involving in an extended lawsuit.

  • Report defective car to dealer or manufacturer

If the car is still under warranty by the time you notice it’s a lemon, you may be able to negotiate with the manufacturer or dealership to have it repaired. If it is a manufacturing error, your dealership/manufacturer will carry out all necessary maintenance free of charge as long as it is covered in your warranty.

It might be challenging to get a dealer or manufacturer to cover the repair cost or carry out maintenance if the warranty does not cover it. This could be an issue if the lemon car were procured from a private seller where fewer guarantees were issued.

  • Contact your province consumer affairs office.

Every province in Canada has laws protecting the consumer in case of any unplanned or substandard transactions. So, if you notice you got a lemon car from a dealership or manufacturer, and they deny the request to fund repair or carry out maintenance, your consumer affairs rep should be able to recommend an alternative or best course of action.

Tips

Below are some of the criteria you should use to evaluate a dealership and car when considering buying a car:

  • Review vehicle ownership history
  • Inspect the car
  • Evaluate car history 
  • Go through the vehicle’s repair history

Conclusion

Purchasing a car is a big decision, and it comes with some level of risk. However, carrying out due diligence on a vehicle before buying will save you a lot of money and time.

A Lemon car is a huge financial problem as it costs a lot in repairs that may go unresolved eventually and is also unsafe for use. So, it is advisable to speak to an expert to put you through the ropes if, perchance, you’ve purchased a lemon car already.

Related Posts

Post Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

Essential reads, delivered weekly

Join the Financial Literacy Train. Get the latest financial information delivered right to your inbox.

Newsletter

Deals and Offers

We’ve rounded up the Best life in Canada, with the best promotions, and the best sign-up bonuses, to help you maximize your benefits.

EQ Bank US Dollar Account

Earn more on your US dollars

World Elite Mastercard

A card for travelling with exclusive perks

Platinum Mastercard

Earn 1 point for every dollar spent

Reviews

Post Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

Advertiser Disclosure

Canada Buzz is an advertising-supported blog. Some products and services that appear on this site are from companies from which Canadabuzz receives compensation. We may alter brand placements on our website to amplify our partners and their offers. Any time you click to our partner websites or register for a product or services through an affiliate link on our website, we may earn a commission at ZERO cost to you.

Canada Buzz is a purely informational blog. Opinions expressed on this blog are NOT endorsed by the reviewed brands. The information provided on this website does not constitute financial or professional advice. However, our team strives to bring you quality, unbiased information.

Bukola

Highlights

Avid researcher, freelance writer, and personal finance enthusiast passionate about financial education and literacy.

Latest Post

Kareena Maya

Personal Finance and Travel Rewards Expert Contributor

Highlights

Experience

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.