Understanding the ins and outs of Lemon Law can be a daunting task for consumers. Not only do these laws vary by state, but they are lengthy and complex. One repeatedly asked question is, “Can a Lemon Law case impact my credit score?” Thankfully, the experts at Conn Law in San Francisco have the answer.
Understanding Lemon Law
If you purchased a vehicle only to find that it has one or several defects, then you may be entitled to compensation as long as it is still under warranty. Each state requires a certain number of repair attempts or an allotted amount of time spent in repair shops, whichever comes first.
Those defects can range from something that negatively affects the vehicle’s operation, like gas mileage, to severe safety issues. If the problem cannot be repaired, then the manufacturer is responsible for replacing or buying back the car. While there’s more to the law that an attorney can help you with, this is Lemon Law in a nutshell.
Lemon Law and Your Credit
Since the vehicle is still under warranty, you more than likely have payments to make on it at the time of filing your claim. If you leased the car, the same applies. So, how do these payments affect your credit score moving forward?
The experts at Conn Law in San Francisco point out that, after a successful Lemon Law case where the manufacturer buys the vehicle back, you are no longer required to make those payments since the car had defects and you no longer own it. The manufacturer essentially made those payments for you when they bought the car back, which means there are no negative impacts on your ability to borrow.
It’s important to note that your score can dip slightly when any loan you’ve taken out is paid off. Various factors go into this equation, like the age of your credit and if you have other loans you’re paying on. However, a fully paid loan shows financial maturity and is better in the long run.
Should the manufacturer replace the car with another, then you might still have payments to make. This type of case can be complicated, and you should always rely on legal professionals to help you sort out the fine details as you work toward a resolution that’s in your best interest.
Things That Can Affect Your Credit
There are two potential ways that your credit can change during a Lemon Law case. The first is an increase if the manufacturer is made to buy the vehicle back. The loan you took out for the car is now paid in full, giving your score a nice boost.
The second is a negative hit, but can only happen if you fail to make payments during the case. It might be frustrating to continue to fork over cash on a defunct car, but not keeping up on your payments throughout your case will negatively impact your score. Keep making each and every payment on time until the case is over. Should you win, you’ll get all that money back anyway.