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What can I do if I buy a 'lemon'?

After buying a home, a car is the second-most expensive purchase most Canadians will make.

As with any complex piece of machinery, there are dozens of things that could go wrong; as cars become increasingly high-tech, they've also become increasingly prone to failure. Canada’s harsh weather can wreak havoc on engines and axles as well as fancier features such as GPS and rear-view cameras.

A "lemon" generally refers to any vehicle with a manufacturer’s or mechanical defect that may affect its overall safety, use or value. In the U.S., consumers are protected by “lemon laws,” which force sellers and manufacturers to buy a faulty vehicle back from the buyer.

Canadians, however, don’t have that same degree of protection. Three provinces — Ontario, Nova Scotia, and Manitoba — have introduced a form of lemon laws, but each have their flaws. Critics say Manitoba’s law doesn’t adequately define what a lemon is, while each province’s acts only target licensed dealers, not private sellers.

Ontario does have strict rules regarding the sale of used vehicles, requiring both dealers and private sellers to provide buyers with a Used Vehicle Information Package (UVIP). This document provides the consumer with the following information:

  • Description of the vehicle (VIN, plate number, year, make, model, etc.)
  • Ontario vehicle registration history
  • Odometer information
  • Outstanding debts on the vehicle
  • Wholesale and retail values for the vehicle's model and year, if available
  • Retail sales tax requirements
  • Bill of sale
  • Tips on vehicle safety standards inspections

What can I do if I end up with a lemon? 

The best route for resolution is the Canadian Motor Vehicle Arbitration Plan (CAMVAP), a free service designed to resolve disputes with car manufacturers. Most disputes are resolved within 70 days and the decisions are binding.

Does CAMVAP cover all makes, models and manufacturers?

No. If you’ve got a faulty BMW, Suzuki, or Mitsubishi, you’ve got to wrangle with the company directly.

Arbitration is also harder on used-car owners, since the manufacturer can blame previous owners for the problem.

Who is eligible for arbitration?

To qualify for arbitration, you need to fulfil certain criteria:

  • Your car is of the current or previous four model years (so in 2015, it must be a 2011 model or newer);
  • It’s travelled less than 160,000 kilometres;
  • You gave both the dealer and the manufacturer a reasonable amount of time to resolve the problem.

What if I don’t qualify for arbitration?

If it turns out arbitration isn’t an option, you don’t have many remaining options. You can complain directly to the manufacturer or take them to court.

What’s involved in an arbitration hearing?

While CAMVAP promises to be “free, fast, and friendly,” that last part is far from guaranteed. Prepare for your arbitration like you might for any court case; bring any relevant witnesses, documents, and the car itself since arbitrators may take it for a test drive. Some complainants opt to bring a lawyer as well. Auto manufacturers have teams of lawyers to protect themselves from lemon complaints, so you may want your own representation, although it undercuts the “free” part of the process.

Can I sue the car manufacturer if arbitration doesn’t go my way?

No. Using the arbitration process forfeits your right to pursue any future civil court action.

How can I avoid a getting stuck with a lemon?

It’s easier than ever now to find product reviews, so do plenty of homework before buying any car, new or used.

For a used car, get the 17-digit Vehicle Identification Number and check if it’s been involved in past accidents. A previously damaged car could have many remaining or recurring problems that you won’t find out about until it’s too late. The VIN can also tell you if the car has ever been subject to a recall or buyback.

Also, check if the car is eligible for CAMVAP arbitration (using the criteria listed above).

Nova Scotia’s lemon laws require used-car dealers to clearly label any previously damaged car that’s been rebuilt or repaired.

If you’re stuck with a faulty car and unsure how to proceed, you can contact your provincial or territorial consumer protection office.

Read more:

How CAMVAP works

Think you may have bought a “lemon”?