NYS Lemon Law for Used Cars: Arbitration and Refunds

The NYS lemon law for used cars, found at General Business Law § 198-b, requires licensed dealers to give you a written warranty on qualifying used vehicles and entitles you to a full refund if the dealer can’t repair a covered defect after a reasonable number of attempts.¹ The protection applies only to cars sold or leased by a dealer for more than $1,500 with 100,000 miles or fewer at delivery. Private sales between individuals are not covered.

Which Used Cars Qualify

A vehicle counts as “used” under the statute once it has been purchased, leased, or transferred after either 18,000 miles of operation or two years from the original delivery date, whichever comes first.¹ A three-year-old car with only 10,000 miles still qualifies. On the top end, the mandatory warranty cuts off at 100,000 miles at delivery. Motor homes and off-road vehicles are excluded.

Three other conditions must be met. The price must exceed $1,500. The seller must be a “dealer,” meaning anyone who sold, offered, leased, or offered to lease three or more used vehicles in the past twelve months.¹ And the vehicle must be used primarily for personal or household purposes. A work truck bought for a commercial fleet is outside the statute.

The Warranty the Dealer Owes You

The written warranty’s length depends on mileage at the time of sale:

36,000 miles or fewer: 90 days or 4,000 miles, whichever comes first.¹
More than 36,000 but fewer than 80,000 miles: 60 days or 3,000 miles, whichever comes first.
80,000 to 100,000 miles: 30 days or 1,000 miles, whichever comes first.

These are floors. A dealer can offer more, never less. Note the exact odometer reading and delivery date so you know when coverage ends.

The warranty must cover the car’s core mechanical systems: the engine (lubricated internal parts, water pump, fuel pump, manifolds, block, cylinder head, flywheel); the transmission (case, internal parts, torque converter); the drive axle; the brakes (master cylinder, booster, wheel cylinders, hydraulic lines, calipers); the radiator; the steering (gear housing, power steering pump, valve body, piston, rack); and electrical components including the alternator, generator, starter, and ignition system.¹ The battery is excluded.

A lot is not on that list. Air conditioning, power windows, audio, suspension, exhaust, and cosmetic parts fall outside the mandatory warranty. If your complaint is about one of those, this law is not your remedy.

When a Used Car Becomes a Lemon

One breakdown doesn’t make a lemon. The statute presumes the dealer has had a reasonable opportunity to repair when, during the warranty period, either of two things happens:¹

The same defect has been subject to repair three or more times and still persists, or
The vehicle has been out of service for a cumulative 15 or more business days due to repairs for one or more covered defects.

The defect also has to “substantially impair the value” of the car to you. That reaches problems that make the vehicle unsafe, unreliable, or significantly less valuable than what you paid. A persistent fault driving the check-engine light would likely qualify. A minor rattle would not. Defects caused by neglect, unauthorized modifications, or post-sale accidents are not covered.

Bring the car to the selling dealer each time. Repairs done at your own mechanic may not count toward the three-attempt threshold, and that single mistake sinks more claims than any other. Get a dated repair order for every visit.

Filing for Arbitration With the Attorney General

If the dealer can’t fix the defect within the statutory limits, you can file for arbitration through the New York State Attorney General’s office rather than suing in court.

Pull together your paperwork before you file: the original purchase or lease contract showing price, mileage, and delivery date; every dealer repair order, with the dates the car entered and left the shop and a description of the work; and copies of any written notice you sent the dealer about the ongoing problem.

Complete the “Request for Arbitration” form on the Attorney General’s website. It asks for the VIN, the exact mileage at purchase, and a chronological account of each service visit.² Fill out every field; incomplete forms get rejected.

The order of steps surprises most people. You submit the form first. The Attorney General’s office screens it to confirm the legal requirements are met, then forwards accepted cases to an independent administrator called NYSDRA. Only after that does NYSDRA contact you for the $120 filing fee and supporting documents.³ Do not send money with the initial application.

The Hearing and the Decision

Once NYSDRA has your fee, an impartial arbitrator is assigned. You can request an in-person hearing or a documents-only review. If you go documents-only, all materials must be submitted within 30 days of filing.²

The arbitrator issues a written decision within 40 days of the filing date. After an in-person hearing with no additional documents needed, the decision comes within five days of the hearing.² A ruling in your favor requires the dealer to accept the vehicle back and refund you.

The decision binds both sides. If you lose, you cannot simply refile. Either party can challenge the award in court within 90 days, but the grounds are narrow, and courts generally uphold awards supported by evidence and grounded in reason.²

What You Get Back

You get the full purchase price. Unlike New York’s new car lemon law, there is no deduction for the miles you drove.² The dealer can subtract a reasonable amount for damage beyond normal wear and tear, and adjust for modifications that changed the car’s market value.

Several costs are not refunded: finance charges, rental or storage fees, and compensation for lost time or use of the vehicle. On a lease, the dealer refunds all payments you made under the contract and cancels future payments owed.¹

Sales tax works differently. The dealer’s refund technically includes it, but to actually recover state and local sales tax you file Form AU-11 directly with the New York State Department of Taxation and Finance.² Separate agency, separate application. Skip it and the money stays with the state.

If You Financed the Car

When there’s a lienholder on the title, part or all of the refund goes directly to the lender to clear the loan. After the buyback closes, get written confirmation from your lender that the balance is zero, and check your credit report to confirm the account shows as paid in full rather than as a repossession or charge-off. A lemon law buyback is not a repossession, but clerical errors happen.

Mistakes That Kill Claims

Three patterns derail more cases than anything else.

Taking the car to your own mechanic instead of the selling dealer. The statute requires that the dealer get a reasonable opportunity to fix the problem. Outside repair records may not count toward the three-attempt threshold.

Not documenting things. Verbal conversations with the service manager carry little weight in arbitration. Put every complaint in writing, insist on a dated work order for every visit, and keep copies. Arbitrators decide on paperwork.

Waiting too long. The warranty windows are short. A 60-day warranty on a weekend car can run out before a problem surfaces. Drive the car regularly during the warranty period and report problems the moment they appear. The 15-day out-of-service clock only counts time that falls inside the warranty window.

Federal Protections That Can Also Apply

Two federal laws sit alongside the state statute.

The Magnuson-Moss Warranty Act covers any consumer product sold with a written warranty, used cars included. If a dealer or manufacturer breaches a written or implied warranty and fails to fix it after a reasonable opportunity, you can sue in state or federal court. If you win, the court can order the other side to pay your attorney’s fees and costs, which is what makes hiring a lawyer realistic.⁴ The statute of limitations generally runs four years from the purchase date.

The FTC Used Car Rule requires every dealer to display a “Buyers Guide” on each used vehicle, disclosing whether it’s sold “as is” or with a warranty, which systems are covered and for how long, and the dealer’s share of repair costs.⁵ In New York, a dealer cannot sell a vehicle that qualifies under § 198-b “as is,” because the state law mandates a warranty. A Buyers Guide marked “as is” on a car with fewer than 100,000 miles is a warning sign.

1
New York State Senate. New York Consolidated Laws, General Business Law – GBS 198-b – Sale or Lease of Used Motor Vehicles
2
New York State Attorney General. Used Car Lemon Law
3
New York State Attorney General. Used Car Lemon Law Arbitration Program Request for Arbitration Form
4
Office of the Law Revision Counsel. 15 USC 2310 – Remedies in Consumer Disputes
5
eCFR. 16 CFR Part 455 – Used Motor Vehicle Trade Regulation Rule