Replacement Vehicle Under Indiana Lemon Law

Indiana Lemon Law (§ 24-5-13-13) gives the consumer the choice between refund and replacement. A replacement vehicle is a “comparable new motor vehicle” — same year, make, model, trim, and options.

What “comparable” means

A comparable replacement vehicle must have:

• Same year, make, model, trim.
• Same major options (drivetrain, transmission, infotainment, safety package, color where reasonable).
• New (not used / demo).
• Equal or better warranty — typically a fresh full manufacturer warranty.

Reasonable-use offset still applies

Under § 24-5-13-13, the manufacturer is entitled to deduct for pre-defect use even on replacement. Typically calculated as:

• A reduced mileage credit on the replacement vehicle’s odometer reading, OR
• A small cash payment from the consumer to cover the offset, OR
• Waived entirely as part of settlement negotiation.

When to choose replacement over refund

• Brand loyalty — consumer wants the same model.
• Long lead-time vehicles — replacement may be faster than re-buying.
• EV-specific — battery defects often replaced with new battery + vehicle.
• Lease-protected pricing — replacement preserves the original lease terms.

When refund is better

• Brand-confidence damage — consumer wants to switch brands.
• Discontinued model — comparable replacement may not exist.
• Model-year transition — manufacturer changes affect “comparable” definition.
• Settlement leverage — cash settlement often more flexible than replacement.

Sales tax credit

Indiana allows sales tax credit on the original vehicle to offset tax on the replacement. Confirm with the dealer and Indiana BMV.

Bottom line

Replacement vs. refund is the consumer’s choice under § 24-5-13-13. Most consumers choose refund, but replacement makes sense where brand loyalty is preserved.

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