New Car Lemon Law
The Arkansas New Motor Vehicle Quality Assurance Act, Act 297 of 1993, provides procedures for a consumer to receive a replacement vehicle, or full refund, for a new motor vehicle which cannot be brought into conformity within the warranty provided. The time period a new vehicle is covered under the Lemon Law ends 24 months after the date of the original delivery of the motor vehicle, or the first 24,000 miles whichever is the latter. The refund from the manufacturer shall be for the full purchase price (less an offset for use by the consumer determined by multiplying the purchase price by a fraction of the number of miles driven by the buyer divided by 120,000 miles), collateral charges such as sales taxes, title taxes, and extended warranties. When the sales tax is refunded to the consumer by the manufacturer, the manufacturer is then entitled to a refund from this office.
The manufacturer is required to comply if after 3 attempts to repair a substantial defect that is likely to cause death or serious bodily injury . The consumer must give written notification by certified mail to the manufacturer of the need to repair the nonconformity providing the manufacturer an final attempt to correct the defect. When the manufacturer receives the notification, it shall within 10 days allow the consumer the opportunity to have the vehicle repaired at an reasonably accessible facility, and within 10 days from arriving at the repair facility have the vehicle's defect corrected. If the manufacturer fails to provide notification within 10 days or does not repair it within 10 days from when the vehicle is delivered, this final attempt is voided.
Within 40 days of failing to correct the nonconformity after a reasonable number of attempts, the manufacturer is required to repurchase the vehicle or replace the vehicle.
An informal dispute procedure certified by the Consumer Protection Division of the Office of the Attorney General is provided for disputes between the manufacturer and consumer as to whether a nonconformity exists.
The manufacturer is allowed a sales tax refund for tax refunded to the consumer by submitting the following:
- A written request for refund.
- Evidence that sales tax was paid on the vehicle.(Tax receipt provided by the Revenue Office).
- Assignment of the tax refund to the manufacturer by the consumer.
- Proof that the manufacturer refunded the sales tax to the consumer.
Any other information pertaining to the transaction, e.g. buy back agreement, informal dispute decision, arbitration documents, etc. The consumer is also entitled to a trade-in voucher when the consumer had a trade-in vehicle that was applied toward the purchase of the defective vehicle that is subsequently repurchased under the Lemon Law. The voucher allows the consumer the benefit of not having to pay sales tax on the entire amount of a replacement vehicle by allowing the same trade allowance taken against the purchase of the defective vehicle.
To receive this voucher, the consumer must make a written request to the Revenue Division's Tax Credits/Special Refunds Section. The consumer must provide information regarding the original sale including the bill of sale for the defective vehicle which gives a description of the trade vehicle, a copy of the sales tax receipt that shows the trade allowance was taken, and a copy of the manufacturer's buy back agreement of the defective vehicle.
The voucher shall be valid for 6 months from the date of issuance. It must be presented at the time of registering a replacement vehicle and shall be used to reduce the sale price of the replacement vehicle in order to determine the amount of tax that is to be paid.
