Replacement Vehicle Under Kentucky Lemon Law

Under Ky. Rev. Stat. § 367.842, the consumer may receive a replacement vehicle (a comparable new motor vehicle) instead of a refund. The choice is generally the consumer’s — unlike South Carolina’s § 56-28-40 manufacturer-option structure.

What counts as a “comparable” replacement

The statute requires “comparable” — typically interpreted as:

• Same model line.
• Equivalent trim level.
• Equivalent options package.
• Same or newer model year — if same model year is no longer in production, next available production year is typically substituted at no charge.

When to choose replacement over refund

Replacement is often preferred when:

• The consumer is otherwise satisfied with the model and just wants a non-defective unit.
• Market price for the vehicle has risen — refund at original price wouldn’t buy a comparable vehicle.
• Sales-tax avoidance is meaningful — replacement typically doesn’t trigger new sales tax. For high-value vehicles (Lexus ES, Corvette, Super Duty F-Series), savings of $2,000-5,000.
• Financing simplicity — existing financing typically transfers to the replacement.
• No re-shopping burden.

When to choose refund over replacement

Refund is often preferred when:

• The consumer no longer trusts the model or manufacturer.
• The consumer wants a different vehicle type.
• Market depreciation favors cash recovery and re-purchase.
• The financing terms are unfavorable.

The replacement process

1. Agreement on comparable specifications.
2. Locating the replacement — inventory search or scheduled production (2-12 weeks waiting).
3. Title transfer.
4. Vehicle exchange at the original dealer or designated location.
5. Documentation update — registration, insurance, financing transfer.

Reasonable allowance for use on replacement

The KY statute is silent on whether reasonable allowance for use applies to replacement. In practice:

• Most replacements proceed without explicit allowance.
• Some manufacturers apply a use-credit or “use fee.”
• For high-mileage cases, manufacturer may request partial cash payment.

Options or upgrades

If the same model is no longer available:

• Upgrade: manufacturer may offer next-trim-up at no charge.
• Newer model year: typically substituted at no charge.
• Different model line: more complex — usually requires consumer agreement.

If consumer wants to upgrade trim or add options:

• Consumer typically pays the difference.

Replacement and existing financing

For financed vehicles:

• Consumer’s existing loan typically transfers to the replacement.
• Refinancing generally not required.
• Insurance — VIN update required.

For leased vehicles (covered for lessees after July 15, 1998):

• Lease transfer — captive finance typically transfers the lease with VIN substitution.
• Same payment — monthly payment typically unchanged.
• Residual value — recalculated.

Tax treatment

Replacement vehicles in KY typically:

• No new sales tax — because no new purchase transaction.
• No new title fee — typically just title-substitution fee.
• No new registration fee — typically just VIN-substitution paperwork.

When replacement is not practical

• Model discontinuation — refund usually the only option.
• Significant price difference — manufacturer’s “comparable” offering costs substantially more or less.
• Consumer trust loss — refund is the cleaner exit.

Home-state OEM replacement dynamics

For KY home-state OEM cases:

• Toyota TMMK Georgetown (Camry, RAV4 Hybrid, Lexus ES) — typically maintains substantial inventory for replacement.
• Ford LAP (Escape, Lincoln Corsair) — typically maintains substantial inventory.
• Ford KTP Louisville (Super Duty F-Series, Expedition, Lincoln Navigator) — heavy-duty truck replacement often longer lead time.
• GM Bowling Green Corvette — Corvette replacement lead times can be substantial (allocation-limited).

Bottom line

Replacement under § 367.842 is a clean option for KY consumers who want a non-defective version of the same vehicle. The choice between refund and replacement is generally the consumer’s. For Corvette and other allocation-limited home-state vehicles, replacement lead times can be substantial — refund may be the cleaner exit.

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