What is a usage deduction?
A usage deduction is a deduction from the money you are owed.
If your Lemon Law claim has been approved, you’ll want to know “What is a usage deduction?”
According to Santa Monica Lemon Law lawyers, the manufacturer is entitled to deduct a usage deduction, also known as a mileage offset, for your use of the vehicle prior to the first warranty repair attempt for the issue giving rise to your Lemon Law claim.
The formula used to calculate the usage deduction is set by law and is the following: Purchase price multiplied by mileage at first repair attempt for Lemon issue divided by 120,000.
The logic behind the usage deduction formula is that the car owner/lessee had the opportunity to use the vehicle without any major problems up until a certain point. The manufacturer is entitled to keep those payments.
Here’s an example using real numbers:
- Purchase price: $50,000
- Payments made: $40,000
- Miles at first repair: 3,000
Usage Deduction = ($50,000) multiplied by (3,000) divided by (120,000) = $1,250
So in the example above, you would subtract the usage deduction from the payments made to find out what you are owed under California’s Lemon Law.
Repurchase Amount = $40,000 – $1,250 = $38,750
Our Santa Monica Lemon Law attorneys collect their fee from the manufacturer on top of your repurchase amount. That means you would owe nothing in attorneys fees.
Contact our Santa Monica Lemon Law lawyers to discuss the details of your potential case.
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