When a manufacturer replaces or repurchases a vehicle, they have a right under Lemon Law to be reimbursed for use of the vehicle which is called the offset for use.
The offset for use is computed by multiplying the number of miles directly attributable to use times the purchase price (in the instance of a lease, purchase price is the vehicle`s capitalized cost if disclosed in the lease or if not disclosed then the manufacturer`s suggested retail price) and dividing by 120,000 (Note: divide by 25,000 for a motorcycle).
Example: Based on a purchase price of $12,000 and 10,000 miles attributable to a consumer`s use, the reasonable offset for use would be:
($12,000) x (10,000 miles) = $1,000
NOTE: if you are a second or subsequent owner: a repurchase offset is based on your purchase price and a replacement offset is based on the original purchase price of the vehicle (as you will receive a new vehicle for the used vehicle you purchased).
IMPORTANT: Be certain that you understand how your offset for use will be calculated. If you are awarded a replacement vehicle, you must pay the offset for use before receiving the new vehicle. This may affect your decision whether to choose repurchase rather than a replacement.
If you are awarded a repurchase, the offset for use will be deducted from your refund before any existing loan obligations are paid. It is possible in situations of large loan balances and high mileage that a refund will not be enough to pay off the loan; the remaining balance would still be your responsibility. Similarly, if you have a lease with low payments and you have put substantial mileage on the vehicle, your `offset` could be larger than your refund.