Wirtz Law Blog

You bought a new vehicle, only to discover it had serious problems. You contacted the automaker, seeking help with the issues. After a few attempts to fix the problem, the automaker offered you a deal: They’d give you some money to compensate you for the issue, and you’d keep the car. 

While these “cash and keep” deals can sound appealing, it is often worse for the car owner than for the automaker. Here’s why.

What is a “Cash and Keep” Deal?

True to its name, a “cash and keep” deal is one in which you both receive a cash settlement for a defective vehicle and keep the vehicle. In this way, a cash-and-keep deal differs from winning a lemon law claim. If you win your claim, you can choose to receive the buyback amount in cash or to receive a non-defective replacement vehicle.

Cash and keep deals offer a quick cheap solution for automakers. Automakers often present them as the quickest, easiest solution for car owners as well. In this case, however, what is best for the automaker isn’t always best for the vehicle owner. 

Cash and Keep: What You Get and What You Lose

In a cash-and-keep deal, you receive a certain amount of money from the automaker. You also keep your vehicle – and its problems. 

In exchange, the automaker usually requires you to sign a release. If you read this release carefully, you will likely discover that you give up the right to bring a lemon law claim against the manufacturer in exchange for taking the deal. If your vehicle continues to have problems, you cannot file a legal claim. You are stuck trading in your car, or worse, selling it to another driver.

Ideally, the “cash” from a cash-and-keep deal would cover the cost of the vehicle, as well as any other costs you’ve racked up, like towing fees. Unfortunately, few cash-and-keep deals are this generous. Many car owners end up with a defective vehicle that still has issues – and the cash they received isn’t enough to cover the costs of past repairs, let alone future ones. 

Without the chance to bring a lemon law claim, the vehicle owner is stuck paying for any future repairs or a new car out of pocket. Meanwhile, the automaker avoids having their name attached to a lemon law case – and saves money by not having to provide a full buyback amount, a replacement vehicle, or full compensation for related costs or attorney’s fees. And, the auto maker does not have to brand the title of the car a lemon to warn the next purchaser.

What To Do If You’re Offered a Cash and Keep Deal

After several trips to the dealership for defects in your vehicle, if you call the auto maker for help, it may offer you a cash-and-keep arrangement. If you receive this offer:

1. Be cautious.  Auto makers are not your friend and they are not generous.  The only reason they are offering you anything is probably so they don’t have to comply with California’ lemon law, which requires them to replace or repurchase your vehicle and brand it a lemon on the title.
2. Read the entire offer carefully. Take note of which rights the offer asks you to give up. If it prevents you from bringing a lemon law claim in the future, move forward with extreme caution. You are being asked to give up very valuable rights in California.
3. Do the math. Does the offered cash amount cover the full buyback price of the vehicle? Does it also cover the costs of towing fees, rideshare fees, and other amounts you’ve already spent because you can’t trust your vehicle? 
4. Factor in the vehicle’s problems. Consider how severe your vehicle’s issues are. If they leave your vehicle unsafe to drive, you could end up with no transportation and no legal options. If the problem is annoying but doesn’t threaten your safety or that of others, you may consider it less risky to take a deal. Also, consider whether the vehicle’s issues might get worse over time. Look up vehicle recalls for your vehicle to see if other systems might be affected by the current problem. 
5. Add in future costs. If the problem is likely to leave you without a running vehicle in the future, add in what towing, cab fare, and similar costs are likely to take from your pocket when this happens. 
6. When in doubt, say no. If the amount offered is too low to cover all your costs, the vehicle’s issues are significant, or you’re uncertain about what you’re giving up to take the deal, walk away. Speak to an experienced lemon law attorney instead.  Remember, the automaker is well suited to take advantage of you.

Finally, never sign a cash and keep deal because you’re worried that you can’t afford a lemon law attorney. The best lemon law attorneys take the case on a contingency with no out of pocket costs to you.  When you win, California lemon law requires automakers to pay attorney’s fees if the car owner wins their case. This arrangement allows most vehicle owners to work with a lawyer while paying nothing out of pocket. If a lemon lawyer wants you to pay anything up front, keep looking for another lemon law firm. 

If you have a lemon vehicle on your hands, don’t wait. Talk to an experienced California lemon law attorney today. The team at Wirtz Law APC can help. It will be your best decision.