What Lemon Laws Protect Canadian Car Buyers?

Unfortunately, in rare cases, some car buyers can end up with a “lemon”—a car that has several manufacturer defects that can’t be fixed, even after several repair attempts. 

If you’re on the hunt for a new or used car and you’re worried about this possibility, here’s a quick look at what lemon laws protect Canadian car buyers. 

The good news for car buyers is that lemons are fairly uncommon. Only around 1% of all cars manufactured each year turn out to have nagging manufacturer’s defects. But that still means roughly 1 out of every 100 cars end up causing their owners nothing but headaches. 

How can you avoid this scenario? The best place to start is by understanding some of the laws in place to protect car buyers from being stuck with a lemon. 

Here’s a quick look at everything you need to know about lemon laws in Canada.

What is a lemon law? 

South of the border, all 50 U.S. states have a lemon law in place for new vehicles, and a handful states have a lemon law in place for used vehicles. 

The specifics vary slightly from state to state but in broad terms, a car can be classified as a lemon when it has “a substantial defect covered by warranty that occurred within a certain time or number of miles after you bought the car,” and can’t be fixed after a “reasonable number of repair attempts.” 

In Canada, there are no definitive lemon laws in place either federally or provincially. However, there are standards that Canadian dealers and manufacturers must adhere to. These standards include disclosures and arbitration processes that are in place to protect car buyers. 

What do car dealers have to disclose?

If there are any mechanical problems with or damage to a vehicle, it’s incumbent on Canadian car dealerships to let potential buyers know. While the criteria differs from province to province, each regulator mandates certain disclosures. 

For example, Ontario’s Vehicle Sales Regulator (OMVIC) describes mandatory disclosures under the Motor Vehicle Dealers Act (MVDA) that dealers must make the buyer aware of. 

Such disclosures include if the vehicle has: 

• required any repairs or modifications due to structural damage
• required any significant repairs exceeding $3000 due to collision or incident damage 
• sustained water or fire damage
• major systems that are not operational (engine, transmission, power train, A/C, computer, electrical, fuel, subframe or suspension)
• had multiple body panels replaced 
• been classified with an irreparable, salvage, or rebuilt status 
• had its warranty voided
• been stolen and recovered
• been registered in another province or territory
• been used as a taxi, emergency vehicle, lease, or rental
• ABS brakes or airbags that aren’t working
• had its odometer rolled back or replaced
• any other issue that could influence the buyer’s decision

See the full list of mandatory disclosures for yourself. 

Take comfort knowing that when you buy a car from a dealership or online retailer, you must be told about any pre-existing conditions that a vehicle has had. Not only can that help you make an informed decision, but it gives you some recourse in the event of a problem. 

What do private car sellers have to disclose?

Buying a used car from a private seller is riskier. Unlike car dealerships, private sellers are not required to disclose the same information. 

In certain situations, you might have legal options if the seller has misrepresented the health of the car you bought, but it will likely require a fight in small claims court. 

This is why it’s so important to do your homework when you’re buying a used car from a private seller. Go the extra mile to get a vehicle history report, take it for an extensive test drive, and take it to a licensed mechanic for a pre-purchase inspection. 

What to do if you bought a lemon car

If you’ve found yourself the proud owner of a lemon car, don’t despair. You do have options, though the number of options at your disposal differ greatly depending on whether you purchased the car from a dealer or private seller. 

What to do if you purchased a car from a dealership

Your first course of action should be pursuing the issue with the dealership (or online retailer) that sold you the vehicle. For starters, the nagging issue with your car may still be under warranty and can be fixed at the manufacturer’s expense, through the dealership. 

However, if the issue persists after several attempts at repair, the manufacturer refuses to cover repair costs, or you’re not satisfied with the repairs, you can seek arbitration through the Canadian Motor Vehicle Arbitration Plan (CAMVAP). 

CAMVAP exists to help settle disputes from consumers who believe their car is unduly problematic or unsafe. Most carmakers are involved in CAMVAP, covering 94% of new car sales in Canada. 

To be eligible, the car’s model must be less than four years old, with fewer than 160,000km. CAMVAP can help you negotiate with your car’s manufacturer for a range of possible outcomes, such as covering the cost of ongoing repairs or even buying back the defective vehicle. 

If your car is ineligible for CAMVAP, you might be able to get some help from a provincial authority, such as the OMVIC (Ontario Motor Vehicle Industry Council), AMVIC (Alberta Motor Vehicle Industry Council), or MVSABC (Motor Vehicle Sales Authority of British Columbia). These organizations can help arbitrate a resolution between you and the dealership or online retailer. 

If all else fails, you can try reaching out to the office of consumer affairs in your province or territory. 

What to do if you purchased a used car from a private seller 

Unfortunately, buying a car from a private seller doesn’t leave you with many great options if that car turns out to be a lemon. Importantly, cars purchased from a private seller are not eligible for CAMVAP. 

Likewise, you're only protected by consumer protection laws when you buy a vehicle from a dealership that is registered with a regulatory body such as OMVIC, AMVIC, or MVSABC. 

You may have some legal recourse available to you through arbitration or small claims court, but you’ll likely need to provide some proof that the seller knew about the car’s defect or damage and didn’t inform you. This can be tough to prove and usually open to interpretation. 

Typically, the cost of pursuing recourse on a private car sale gone bad through arbitration or the courts is not worth it. 

Shop confidently with Canada Drives

Buying a car is a big decision but reputable retailers have got you covered.

Canada Drives is registered with local licensing bodies and provides complimentary CARFAX vehicle history reports and a free warranty with every vehicle, so you can shop with confidence and peace of mind.