With automakers producing hundreds of thousands of vehicles every month, there is the possibility that at least a few of them have serious problems. And with used cars there are so many things that could be wrong we couldn't possibly list them all (we'll list one: squirrels in the engine). There was a time when warranties were written to protect against this kind of thing. Then some smart lawyers got involved and there was a time when warranties were written to make it all but impossible to use your warranty. And then Lemon Laws came along.
Introduction to Lemon Laws
Generally speaking, a Lemon Law is any law written to give consumers protection form being sold defective goods. What a Lemon Law isn't is a guarantee that you'll be given a refund or replacement for your product without having to do some legwork. While Lemon Laws apply to a large segment of products, we're going to focus on cars.
Federal Lemon Law Protections
There are basically two dominant federal statutes protecting you from getting stuck with a malfunctioning car. The first is the Magnuson-Moss Warranty Act, named for Senator Warren Magnuson and Kate Moss.
Basically, this act protects consumers by defining the terms of a warranty and providing for a method of redress against suppliers that won't fulfill the terms of the warranty. The great breakthrough of this law is that it says if GM offers you a full warranty on your Chevy Cobalt, it doesn't work within the time-frame of the warranty, they not only have to replace or repair your car without charge, they have to do so within a reasonable amount of time.
Another component of this law is that it states that you'll be awarded attorney's fees if you win the case, thus preventing the supplier from merely waiting until you run out of money to pay your attorney. If you're buying a used car and it has a warranty, this is most often your best line of defense since most laws only cover vehicles purchased new.
The other important federal level protection comes from Article Two of the Uniform Commercial Code. To sum up the numerous subsections, you have the right to a replacement car IF you've completely complied with the procedures for replacing the vehicle (i.e., if they want to look at the car you have to take it in, provide documentation, et cetera).
State Laws
State laws vary from a recitation and agreement with the components of the UCC (making it uniform, get it?) to specific laws detailing what is and is not covered. When studying your state's Lemon Law, it's important to understand what is covered and the period of coverage.
For example, the Idaho Lemon Law covers all new vehicles (whether personal or business use), but doesn't cover motorcycles, trailers, farm equipment (so no tractor fighting folks). If you own a vehicle that qualifies in Idaho, the vehicle is liable for a replacement if four repair attempts have been made or it's been out-of-service for 30 business days out of two years or 24,000 miles (whichever is shortest). There's also a clause for unsuccessful repairs of a serious nature like steering or braking.
In Texas, the law covers motorcycles, RVs and other vehicles. Eligibility qualifies as four unsuccessful repairs when two of those repairs occurred within either one year or 12,000 miles and then the next two occurring within an additional period of the same length.
You can find a quick summary of these laws here, with more detailed information found on that state or on the site of your state's Attorney General or Consumer Affairs department.
What to do if you suspect your car is a lemon
If your brand new Cobalt is constantly in for repairs and/or is constantly out of service for problems related to the design and construction (not drunkenly driving it over ramps), you may be entitled to replacement under the warranty and under the law. But just because you're entitled, doesn't mean you'll actually get it. This is where thinking like a lawyer comes in handy.
First, save copies of everything that you get from the dealership, from the person who does any repairs. When you talk to someone, write it down and put in a file. You should be doing this with your major purchases anyways.
Second, Consumer Affairs recommends that you ask for Technical Service Bulletins related to your car, which are basically instructions sent from your carmaker to dealerships to let them know about specific defects. I.E., it may tell your Chevy dealership that the Cobalt's emissions sensor goes on the fritz in 2007 models in warmer climates. This will let you know if the company is aware of the problem or not.
Third, if your poor little Cobalt isn't getting better after a certain amount of repairs you need to contact the manufacturer and let them know you consider the car a lemon. The easiest way to do this is get a form from your state, if they have one, and submit it (always via certified mail!). For example, Wisconsin has a good form online.
If your manufacturer is enrolled in the BBB Autoline Program, you can do all of the work and arbitration through the BBB and their website.
Fourth, assure your car is in good shape. If you turn in your "lemon" and it's missing the radio and the door has been scratched then the manufacturer has a right to negotiate a lower price for your car. If it's still in good shape then you may still be able to get close to full value for it.
What if they won't take the car back
Most major automakers are going to do their best to maintain an image and avoid generating ill will. On the other hand, it's possible that the manufacturer doesn't buy that the car is defective and doesn't want to replace your Cobalt.
In most states, there's a non-governmental mediation program offered. This is usually either the BBB or another arbitration group. This is often cheaper and easier than going to court and is usually non-binding unless both parties agree to the conditions.
If you don't have the option of arbitration, or arbitration fails, you can take the manufacturer to court. There are thousands of lawyers that are more than happy to take your case (just Google it) because the laws to protect consumers are often strong. Most attorneys will look at your case for free and, because of the Magnuson-Moss Act, they can get attorney's fees paid by the manufacturer if they win.
Conclusion
Ideally, your car will never be a lemon and your dealer/manufacturer will work with you to provide for you if a problem does arise. One reason why manufacturers are offering longer warranty terms is that they're continually building better products. If you do have a problem that the seller won't repair, you should take comfort in knowing the laws are written to benefit the consumer. There's not guarantee you'll win, but taking steps to document the process effectively is your best weapon.