Usage Fee Calculation in California
The Song-Beverly Consumer Warranty Act provides an array of protections for consumers who buy motor vehicles in California. But even if you do purchase what turns out to be a lemon, you may still have to pay what's known as a usage fee.
This is money that the manufacturer will be entitled to charge for you driving the vehicle and it will be deducted from your settlement. The fee represents the use you have gotten out of the vehicle up until the time of the first repair attempt for the problem that makes the vehicle a lemon.
Whether you leased or purchased a lemon car – and whether you get the car replaced or receive a refund – the usage fee may apply. Here is how the amount is determined:
(miles driven)/(total life of car (in miles))x price of car = usage fee
- Calculate the price of the vehicle (e.g. $25,000).
- Measure the amount of miles driven from the moment of purchase until the time that the car was first brought into a repair facility for the lemon problem. For instance, let's say that after driving 5,000 miles, the transmission was giving you trouble and you brought the vehicle in for repairs.
- Calculate your usage fee by dividing 5,000 miles by 120,000 miles (generally considered to be the average life of a car), and then multiply that number by the purchase price of the car. So, in our case, 5,000 divided by 120,000 times $25,000 equals $1041.66.
It's important to note that the odometer number that you use to calculate the usage fee depends on when you first brought the car in for the defect that identifies the car as a lemon.
To clarify, let's use another example. Say after 2,000 miles, you discover a problem with your headlamp. You take it in. It gets fixed. Then, 3,000 miles later (when your odometer reads 5,000 miles), the transmission fails. The authorized dealer tries (and fails) to fix the transmission four times.
So do you calculate your usage fee based on the 2,000 mile number (when your headlamp failed) or the 5,000 mile number (when the transmission first went)?
Answer: You use the 5,000 mile number.
If you have further questions about the usage fee calculation, or if you need help with any aspect of California's lemon law, please connect with the Law Offices of Howard D. Silver today at 818-597-2610.