The manufacturer made an offer. Buyback or cash and keep?

When a manufacturer finally responds to a lemon law claim, it often comes with an offer: buy the vehicle back, replace it, or pay you a sum of money and let you keep the car. That last one is usually called a "cash and keep" offer. Each can be the right result for some people. Each can also leave money on the table, or give away rights you did not mean to give away, if the paperwork is not checked.

This guide explains what a lemon law buyback offer in California must include under the Song-Beverly Act, how cash-and-keep settlements work, what releases can and cannot require, the response deadlines for manufacturers that opted in to the 2025 procedures, and the red flags we look for. It is general information as of October 2026, not legal advice about your offer. We do not give typical settlement amounts, because there is no reliable public data for them and every case turns on its own numbers.

Three kinds of offers

• Repurchase (buyback, or "restitution"). You return the vehicle. The manufacturer refunds what the law says it must, pays off your loan and pays your attorney's fees and costs.
• Replacement. You get a substantially identical new vehicle. The law lets you refuse a replacement and choose a refund instead.
• Cash and keep. You keep the vehicle and receive a payment in exchange for a release of your claims. The vehicle stays yours, defects and all.

The first two are the statutory remedies. Cash and keep is a negotiated settlement; the statute does not set its amount.

What a repurchase must include

Under Civil Code § 1793.2(d)(2)(B), restitution means the actual price paid or payable by the buyer, including charges for transportation and manufacturer-installed options, plus collateral charges such as sales tax, license fees, registration fees and other official fees, plus incidental damages. The statute excludes nonmanufacturer items installed by a dealer or the buyer. Incidental damages include reasonable repair, towing and rental car costs actually incurred.

In practice, a buyback offer usually breaks down into:

• your down payment and trade-in credit;
• the monthly payments you have made;
• a payoff of the remaining loan, sent directly to the lender;
• taxes and official fees;
• incidental costs you can document;
• minus the mileage offset.

The mileage offset is the only reduction the statute itself builds in. Under § 1793.2(d)(2)(C), it is the price paid or payable multiplied by the miles driven before you first delivered the vehicle for repair of the problem, divided by 120,000. Hypothetical: if you paid $40,000 and had 6,000 miles on the car at the first repair visit for the defect, the offset would be $40,000 × 6,000 ÷ 120,000 = $2,000. The miles you drove after that first visit are not counted. Check which repair order the manufacturer used; the earlier the visit, the smaller the offset. Our lemon law buyback calculator runs the numbers for you.

Extra rules for opted-in manufacturers

For manufacturers that elected the 2025 procedures, Code of Civil Procedure § 871.27 changes the math in specific ways. The manufacturer may deduct optional equipment, service contracts and GAP products bought from third parties, though items supplied by the selling dealer or authorized by the manufacturer remain recoverable. It may deduct negative equity rolled in from a prior vehicle. A noncash manufacturer rebate on the down payment is not counted in the price paid. And the manufacturer does not pay future interest you will not owe once the loan is paid off. Our guide to the AB 1755 changes covers these in more detail.

How cash-and-keep offers work

A cash-and-keep offer pays you to release your claims while you keep driving the vehicle. There is no statutory formula. The number is negotiated, and it usually reflects the strength of the claim, what a buyback would cost the manufacturer, and the risk on both sides.

It can make sense when:

• the defect has finally been fixed and you like the vehicle;
• your loan balance, negative equity or a rate you want to keep makes a buyback less attractive;
• the vehicle was bought used and a buyback is not available after the 2024 Rodriguez decision (see used car lemon law), so money damages are the realistic remedy.

It is riskier when the defect is a safety problem that has not been repaired, or when the car is likely to keep breaking. Once you sign the release, future failures from the same problem are usually your cost, except for warranty repairs still owed under the remaining warranty. Before you accept, ask:

• Does the release end the warranty, or does the factory warranty continue? It should continue.
• Is the payment in addition to attorney's fees, or are fees coming out of it?
• Does the release cover only this vehicle's claims, or everything?
• When will the money be paid, and what happens if it is late?

Because the manufacturer does not take the vehicle back in a cash-and-keep deal, the title branding rule for reacquired vehicles in Civil Code § 1793.23, which requires a "Lemon Law Buyback" title notation before resale, does not come into play in the same way. If you later sell the car, ask a lawyer what you should disclose about known problems.

Releases: what they can and cannot say

Every offer comes with a release. Read it as closely as the dollar figure.

• No gag clause about the vehicle's problems. Civil Code § 1793.26 bars a manufacturer, dealer or lienholder that reacquires a vehicle from requiring a California buyer or lessee to keep quiet about the vehicle's problems or the non-financial terms of the reacquisition. Such a clause is void. Confidentiality about the financial terms is still allowed.
• Opted-in manufacturers must use the standardized release. Under § 871.27(g)(1), a restitution or replacement remedy cannot be conditioned on any release other than the "Standardized SBA Release" in § 871.25. That form releases claims relating to the purchase, lease, condition, use or repair of the subject vehicle, takes effect when you return the vehicle, and sets out how attorney's fees are resolved. It contains no confidentiality clause.
• Scope. A release outside the standardized form may try to cover more: personal injury claims, claims against the dealer, or claims about other vehicles. If you were hurt because of the defect, do not sign a release that covers injuries without separate advice.
• Dismissal terms. If a lawsuit is on file, the release should say how and when it will be dismissed, and whether the court keeps power to enforce the deal.

Offer timelines under AB 1755

For manufacturers that opted in, the 2025 rules put dates on the process:

• Pre-suit notice. If you send the written notice in § 871.24, the manufacturer can avoid a civil penalty only if, within 30 days of receiving it, it offers restitution or replacement plus reasonable attorney's fees and costs if you have a lawyer, and completes the transaction within 60 days of receiving the notice. You must cooperate in good faith with reasonable requests for documents.
• You must keep the vehicle at least 30 days after the manufacturer receives the notice, and the full 60 days if it makes an offer.
• After a signed release. Under § 871.27(g)(2), the manufacturer must complete the agreed buyback or replacement within 30 days of receiving the signed release, or pay a mandatory penalty of $50 per day until it is done, unless the parties agree otherwise or your own failure to provide reasonable documents caused the delay.
• At the hand-back. Under § 871.27(g)(3), you receive your restitution when you return the vehicle, and within one business day the manufacturer must expedite the loan payoff and send attorney's fees and any civil penalty to your lawyer.
• Fee disputes before suit go to neutral, binding arbitration, and a disagreement over fees alone does not make an offer noncompliant.

Whether these rules apply depends on whether your manufacturer opted in for the year your vehicle was sold. Check the Department of Consumer Affairs list. For manufacturers that did not opt in, there is no statutory 30-day offer clock, but the manufacturer's duty to "promptly" replace or refund under § 1793.2(d)(2) still applies.

Red flags in a lemon law offer

1. An offset based on the wrong mileage, such as the mileage at your demand letter or at the last repair instead of the first repair visit for the defect.
2. Missing pieces: no taxes or registration, no incidental costs, or a payoff that leaves you owing the lender.
3. Deductions the law does not allow, such as deducting dealer-installed items that the 2025 rules say remain recoverable, or deducting third-party add-ons when your manufacturer did not opt in.
4. A replacement pushed on you when you asked for a refund. The choice is yours under § 1793.2(d)(2).
5. A gag clause about the vehicle's problems, which § 1793.26 makes void.
6. Fees coming out of your money. Under § 1794(d), a prevailing buyer recovers attorney's fees and costs from the manufacturer. See who pays lemon law attorney's fees.
7. A deadline to accept in a day or two, or an offer made through the dealer service desk that asks you to sign a "goodwill" form.
8. A trade-in "assist" toward a new car from the same brand, in exchange for a release. That is usually worth far less than a buyback.
9. A release that covers personal injury or unrelated claims.

How to evaluate the offer

1. Get the offer in writing, with an itemized breakdown.
2. Pull your contract, payment history, a current payoff letter and every repair order.
3. Find the first repair order for the defect and check the mileage the offset uses.
4. Run the numbers in our buyback calculator and compare.
5. Read the release for scope, confidentiality and fees.
6. Note the response deadline and do not sell or trade the vehicle while the offer is open.

For what a full resolution can include, including the civil penalty for willful violations, see what you get in a lemon law settlement. For timing, see how long a lemon law case takes.

LaCour Trial Lawyers reviews lemon law offers for California drivers in English and Spanish. Send us the offer and your paperwork for a free, confidential review before you sign.

Frequently asked questions

This guide is general information about California and federal law and about public records as of its date. It is not legal advice, and reading it or contacting us does not create an attorney–client relationship. Allegations in lawsuits are claims, not findings. Prior results do not guarantee a similar outcome. Attorney advertising.