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In Canada, we experience many different weather and road conditions, so it can be great when you have access to a reliable car. After all, not only can a good vehicle last for many years, it can get you to and from places where public transit isn’t an option or taxis and Ubers are too expensive. 

However, not all cars are affordable or, for that matter, dependable enough to be a worthwhile purchase and you don’t want to end up with a lemon sitting in your driveway, collecting dust and rust. 

Buying a car? Find out how you can finance your car.

What Kind Of Car Qualifies As A “Lemon”?

Technically speaking, a lemon car refers to any vehicle that has some sort of mechanical or electrical issue that severely affects its performance, resale value, or overall safety. So, when someone tells you they bought a lemon, they generally mean a car that constantly needs repairs and wasn’t worth the money they spent on it.

Common issues lemon cars can have include but aren’t limited to:

  • Defects that occurred during the manufacturing process  
  • A collision or incident that significantly damaged the vehicle’s integrity
  • Recurring brake, suspension, engine, or transmission problems
  • Undiagnosed issues caused by subpar repairs or modifications
  • The odometer has been tampered with or rolled back
  • There’s a lack of proper documentation (registration, car report, etc.)
  • Parts of the vehicle’s history are undisclosed or falsified 

Although there is some debate over where the terminology comes from, a lemon car can certainly be a huge problem, in both the financial and conventional sense. Not only could a lemon cost a lot in repairs that may not even solve the problem, but it can also be unsafe to drive, so it’s best to start looking into solutions right away if you’ve purchased one.

New vs. Used Cars

What Can You Do If You’ve Bought A Lemon Car?

Buying a lemon car can be an unfortunate and expensive turn of events, especially if you paid a lot for it or it’s your only vehicle. Luckily, there are a few steps you can take to resolve the situation financially and legally, such as:

Report To The Dealer Or Manufacturer 

Hopefully, the car will still be under warranty by the time you figure out it’s a lemon. In that case, you may be able to negotiate with the dealership or manufacturer to have it repaired. If it’s an issue directly related to the manufacturing process, they will normally do any necessary maintenance free of charge, as long as your warranty covers it. 

However, there are some cases where the dealer or manufacturer will refuse to pay for or perform any repairs or the required maintenance is not covered by the warranty. This is equally problematic when you’ve bought a lemon from a private seller, where there are fewer guarantees. In that case, you may have to take more drastic actions.   

Contact Your Local Consumer Affairs Office

Every province and territory has laws that protect the consumer in the event of unintentional or unsatisfactory purchases. So, if you’ve unknowingly bought a lemon from a private seller or your auto dealer/manufacturer denies the requested costs or maintenance, they should at least be able to direct you toward the best course of action.

Apply For CAMVAP

Otherwise known as the Canadian Motor Vehicle Arbitration Plan, CAMVAP is a free program, wherein an arbitrator contacts the source of your lemon car on your behalf. Typically, their job involves negotiating with manufacturers to have your repairs covered, poor maintenance taken care of or, if necessary, getting them to buy the car back.

All this said you should be aware that a CAMVAP agreement is legally binding, meaning your final settlement cannot be changed or disputed, even in court. Additionally, while CAMVAP covers around 90% of vehicles sold in Canada, there are requirements that your lemon car must pass to be eligible for the program, such as:

  • Must be no more than 4 years old
  • Must have been sold to you by the manufacturer (not a private seller)
  • Must have less than 160,000 km on the odometer
  • Must have extensive unseen damage or maintenance problems
  • Must be produced by a manufacturer that participates in the program (certain makes and models will not qualify)   

Got a lemon car? Find out if you should repair it or buy a new car

Go To Small Claims Court  

If none of the above options are effective, you can also take the dealer or manufacturer to court. Although this can be an expensive and time-consuming affair, the source of your lemon car may agree to pay a small settlement to cover the cost of any repairs, rather than be involved in a lengthy lawsuit.

However, as mentioned, any legal case can be pricey because you may have to hire an attorney and deal with court fees later on, both of which can add up to just as much, if not more than your repairs would have cost. So, unless your car is a true lemon that you paid a hefty price for, one of the earlier options may work out better for you. 

Are Lemon Cars Covered Under My Warranty Or Insurance Policy?

If the necessary repairs aren’t too pricey or extensive, you may be wondering whether a simple warranty or insurance claim would at least provide some financial relief. Note that even if you qualify, in both cases, you may have to deal with some costs when it comes to towing or your own transportation while your vehicle is being fixed. 

Will Your Warranty Cover A Lemon Car’s Repairs/Maintenance?

Typically, a good warranty will cover most factory or dealership-related defects, as well as any labour needed. Then again, warranties can be limited to a certain distance you put on the car and may not cover basic wear and tear, vehicles that are beyond a specific age (sometimes older than 10 years) or mileage (usually over 150,000 – 200,000 km). Be sure to check your warranty’s terms and conditions before you buy any car

Will Your Insurance Cover A Lemon Car’s Repairs/Maintenance?

The right auto insurance policy can also be a huge asset in many vehicle-related incidents, including the purchase of a defective vehicle. However, you may have to provide proof that you bought a car that was misrepresented. So, if you purchased it from a quick private sale and failed to get the car inspected, you may not qualify for a large enough claim to finance any repairs or maintenance, if at all. 

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How Can I Avoid Buying A Lemon Car?

If you don’t know a lot about vehicles, it can be difficult to know whether a car is a lemon or truly worth the money you’ll be investing in it. Don’t worry, because there are a few precautionary measures you can take to avoid the possibility of buying a lemon car:

Find The Vehicle’s Ownership History

The first thing you should do before buying any car, whether it be from a private seller, dealership or manufacturer, is get a vehicle report that details its history. In this report, you should be able to see every time the vehicle was purchased or sent back to the manufacturer/dealer because of some sort of defect (before it was labelled as a lemon). In Canada, there are two major vehicle reporting companies; CarFax and AutoCheck. 

Check The Vehicle’s History

In your car report, you should also be able to inspect the car’s driving history, including any collisions, traffic incidents, or legal cases it’s been involved in. This way, you can determine how the car has been driven in the past or whether any defects were the cause of whatever recorded incidents have occurred. Be careful, as repairs that weren’t claimed on the previous owner’s insurance or were paid for in cash may not show up.  

Understand The Vehicle’s Repair History

The vehicle’s maintenance history is particularly important to study because it should detail any major repairs or recurring problems the car has had in its lifetime, even if it’s fresh off the factory floor. You can also find out where the repairs were done and if the maintenance issues were caused by superficial wear and tear, an undiagnosed problem following an accident or customization or a more significant complication. 

Get The Car Inspected

Even if the vehicle comes with a history report, it’s still essential to get the car inspected by a professional and trustworthy mechanic before you buy it. If they’re experienced enough, they should easily be able to tell you if the car is a lemon and, if so, whether it’s worth repairing or a total lost cause. While some dealerships do on-site inspections, they should let you bring the car to be inspected elsewhere in exchange for a deposit. 

If the previous owner or dealer refuses to let you get the car inspected at an outside mechanic, it may be a warning sign that they have something to hide!      

Learn About Your Province Or Territory’s Lemon Laws

Unfortunately, unlike some parts of the United States, dealerships in Canada are not legally obligated to inform a potential client whether the vehicle has been deemed as a lemon. However, in certain provinces and territories, they may have to tell you if the manufacturer has ever bought back the car due to a lawsuit or other legal event. 

While situations like this can give you an idea of whether or not the car is a lemon, you can see how important it is to know the vehicle’s history before buying it. After all, some insurance companies and manufacturers won’t give you any form of compensation if you willingly bought the car without checking its vehicle report or getting it inspected. 

Buying a used car? Check out these 10 things you should know when buying a used car

Looking To Purchase A Car Soon? 

If you’re in the market to purchase a new or new to you vehicle, Loans Canada can help you compare loan offers and find the best lender for your unique needs.

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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