Refund (Buyback) Under Tennessee Lemon Law

A Tennessee Lemon Law refund (also called “buyback”) under § 55-24-103 restores the consumer to their pre-purchase financial position, minus a reasonable-use offset for miles driven before the first defect report.

What’s included in a § 55-24-103 refund

• Purchase price — the full price paid for the vehicle.
• Sales tax — Tennessee sales tax paid at purchase.
• Registration and title fees.
• Finance charges — interest paid on auto loan.
• Incidental damages — rental car costs, towing, diagnostic fees, lost wages for repair-shop visits.
• Trade-in credit — if a trade-in was part of the purchase.

The reasonable-use offset

§ 55-24-103 provides for a reasonable use deduction. Tennessee courts typically calculate:

Reasonable Use Offset = (Purchase Price × Miles Before First Report) ÷ 120,000

Example: $40,000 vehicle, first defect reported at 6,000 miles.

• Offset = ($40,000 × 6,000) / 120,000 = $2,000
• Refund = $40,000 - $2,000 = $38,000 + tax + fees + incidental

The 120,000-mile denominator is the standard Tennessee life-expectancy assumption.

Lease vehicles

For leased vehicles, the refund covers:

• All lease payments made.
• Sales tax paid.
• Down payment / capitalized cost reduction.
• Acquisition fee.
• Disposition fee (waived).
• Incidental damages.

Plus the manufacturer must terminate the lease without further obligation to the consumer.

What’s NOT typically included

• GAP insurance (separate refund through GAP insurer).
• Extended warranty (separate refund through warranty seller).
• Personal modifications / aftermarket parts not factory-installed.
• Consequential damages beyond statutory limits (without TCPA claim).

Process for receiving refund

After BBB award or court judgment / settlement:

1. Consumer signs surrender documents transferring vehicle title.
2. Manufacturer issues check typically within 30 days.
3. Lienholder paid first (auto loan balance).
4. Consumer receives the balance.

For replacement, the substitution timeline is similar.

TCPA stacking

A Lemon Law refund can be combined with TCPA actual + treble damages where deceptive practices are also pleaded. TCPA damages do not offset the Lemon Law refund.

Bottom line

A Tennessee Lemon Law refund returns the consumer to their financial baseline, minus a reasonable-use offset capped at 120,000 miles. TCPA stacking with discretionary treble damages can substantially increase total recovery.

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