Private personal sold a lemon...

That depends.  Generally speaking, the so-called "Lemon Laws" only apply to brand new vehicles, not used vehicles.  So from that standpoint, no you do not have to refund the money. However, if you knew about a problem with the car and tried to hide it in some manner, you could be liable for fraud in inducing the sale of the car.  You have no duty to disclose problems which could be discovered by the potential buyer, but if you are aware of hidden problems, you may have a duty to disclose those. (i.e. a knock in the engine covered up so it couldnt be heard by a potential buyer). Also, it depends on whether the sale was "As Is" or with a warranty.  The law presumes that private sales are as is unless a warranty was expressly given.  If you said that you would warrant the vehicle for any given period of time, then you could have a duty to repair the vehicle or refund the money, so long as the defect was within the parameters of the warranty. (I assume you did not give a warranty, either verbally or in writing). Based upon the fact that you said you allowed them to test drive it, that leads me to believe that they were given a fair opportunity to test and inspect the vehicle before deciding to buy.  So long as you did not fail to disclose any information you had about hidden defect, you should have no duty to refund the money.