The California CARS Act: Consumer Guide

The California CARS Act: Consumer Guide

California’s Combating Auto Retail Scams Act, Senate Bill 766, was signed in October 2025 and took effect on October 1, 2026. It gives you new protections against dealer fraud and deceptive sales practices when you buy or lease from a licensed California dealer, new or used. Three things changed for you as a buyer. The advertised price has to be the full price, dealers can no longer charge you for add-on products that give you nothing, and a used vehicle priced at $50,000 or less comes with three days to cancel. A federal bill in Congress with the same acronym deals with vehicle emissions rules and is a separate subject.

Sales the CARS Act Covers

Licensed dealers selling or leasing to retail buyers are covered. The following are left out:

  • Sales between private parties
  • Wholesale sales and sales at auction
  • Fleet sales and buyers who purchase five or more vehicles a year for business use
  • Vehicles with a gross vehicle weight rating of 10,000 pounds or more
  • Motorcycles
  • Vehicles that do not have to be registered

Advertised Prices Have to Be the Total Price

Any ad for a specific vehicle has to state the total price. Total price means the full sale price with dealer-installed items and any dealer markup built in. The only charges a dealer can leave out are taxes and government fees like registration, title, and the tire fee. A rebate cannot be subtracted from the advertised number.

The same rule applies to the first written message a dealer sends you about a specific vehicle or a price, whether by email or text. A first message of either kind has to state the total price at least once, and the dealer is required to keep a copy of it for two years.

Monthly Payment Quotes Have to Show the Total Cost

When a dealer gives you a monthly payment in writing during the negotiation, the dealer also has to give you, in writing, the total amount you will pay over the whole contract if you make every payment as scheduled. If the payment assumes a down payment or a trade-in, the dealer has to state the assumed amount separately. When a dealer compares payment options and points you to the lower payment, the dealer has to tell you in writing that lower monthly payments in most cases raise the total amount you pay.

Add-On Products a Dealer Can No Longer Charge For

A dealer cannot charge you for an add-on product that gives you no benefit. Civil Code section 1784.42 names seven:

  • Nitrogen tire fill that is less than 95 percent nitrogen
  • A product that does not cover the vehicle, you, or the transaction
  • GAP coverage that does not comply with California law
  • A service contract that is void because of a preexisting condition on the vehicle
  • Oil changes on an electric vehicle
  • Catalytic converter etching on a vehicle that has no catalytic converter
  • Paint or surface protection that voids the manufacturer’s paint warranty

When you do buy an add-on, the dealer has to pay the company providing it within 10 days of the date you sign so the coverage is in place.

Statements a Dealer Is Barred From Making

Civil Code section 1784.40 bars a dealer from misrepresenting the following:

  • The cost or terms of buying, financing, or leasing the vehicle
  • What an add-on covers, costs, or excludes
  • Whether the deal is a lease or a purchase
  • Whether the advertised vehicle is available at the advertised price
  • Whether you have been preapproved for financing
  • The information on your financing application
  • Whether the dealer will keep your down payment or trade-in, charge you fees, or take action against you if you do not go through with the deal
  • When the dealer will pay off the loan on your trade-in
  • Your remedy if the dealer will not sell you the vehicle at the total price
  • Any connection to a government agency, including the military
  • The circumstances under which the dealer can repossess the vehicle
  • Whether the vehicle can be taken outside California or outside the United States
  • Any of the disclosures the Act requires the dealer to give you

Yo-yo financing, where a dealer sends you home in the vehicle and later calls you back to sign a worse deal, is one practice covered by section 1784.40.

Three Days to Cancel a Used Car Purchase or Lease

Vehicles That Qualify

The right to cancel applies when all of the following are true:

  • The vehicle is used
  • You bought or leased it from a dealer
  • The price is $50,000 or less
  • You have driven it no more than 400 miles since signing

New vehicles have no cancellation right in California. Buying out the vehicle you already lease does not qualify.

Counting the Three Days

The three days are calendar days, and they start the day after you sign. Your deadline is the close of business on the third day. If the dealership is closed on the third day, the deadline moves to the next day it is open to the public. Sign on a Friday and your three days are Saturday, Sunday, and Monday.

The Cost to Cancel

The dealer can keep a restocking fee of 1.5 percent of the sale price, with a minimum of $200 and a maximum of $600. If the dealer’s actual cost to ship the vehicle is lower than the restocking fee, the dealer keeps the shipping cost instead. If you drove more than 250 miles, the dealer can also charge $1 for each mile over 250, up to $150. The most you can be charged is $750.

On a $30,000 used car driven 300 miles, the restocking fee is $450 and the mileage fee is $50, for a total of $500.

Returning the Vehicle

You have to bring the vehicle back in the same condition the dealer delivered it, with reasonable wear and tear allowed, free of any new liens, and with the keys and anything else the dealer gave you. Once you cancel, the dealer has 48 hours to cancel the contract and refund your money, minus the restocking and mileage fees.

If you traded in a vehicle, the dealer has to return it with its title. If the dealer already sold your trade-in or started transferring the title, the dealer has to pay you the greater of the agreed trade-in value, the amount the dealer sold it for, or its fair market value.

The Cancellation Paperwork You Should Receive

The dealer has to give you a separate document titled “3-Day Right to Cancel Used Car Purchase or Lease.” It lists the dealer, you, the vehicle and its VIN, your deadline, how the restocking fee is calculated, the 400-mile limit, and what you have to bring back. Keep it. The first page of your contract also has to carry a notice that used vehicles priced at $50,000 or less come with three days to cancel and that new vehicles do not, and the dealership has to post the same notice in 36-point type.

Paid Cancellation Option Contracts Ended October 1, 2026

If you bought a used vehicle before October 1, 2026, the old system applies to your purchase. Before that date a dealer had to offer you a two-day cancellation option on a used vehicle priced under $40,000, but you had to pay for the option at signing, and the fee was not refunded if you never used it. Since October 1, 2026, the option contract is gone and the three-day right applies automatically at no upfront cost.

Dealer Conduct the Act Treats as a Violation

Civil Code section 1784.43(c) lists conduct that violates the Act when you exercise your right to cancel:

  • Blocking or discouraging your cancellation
  • Charging more than the allowed restocking and mileage fees
  • Holding your down payment or trade-in after you cancel
  • Missing the 48-hour refund deadline
  • Refusing to pay you for a trade-in the dealer already sold
  • Withholding the records of the trade-in sale
  • Asserting damage to the vehicle without a basis for it
  • Telling you no one is available to process the refund

Any agreement asking you to give up rights under the Act is void.

Your Options if a Dealer Breaks the CARS Act

The Act does not create its own type of lawsuit. Its remedies add to the ones you already have under California law. In practice, a buyer brings a dealer case under the Consumers Legal Remedies Act, which covers misrepresentations in a consumer sale, the Unfair Competition Law, which covers unlawful and unfair business practices, the False Advertising Law, and the Automobile Sales Finance Act when the contract disclosures are wrong. The California Attorney General, your district attorney, your city attorney, and the DMV, which licenses dealers, can also act on violations.

Keep every text, email, ad screenshot, contract page, and cancellation notice from the transaction. The dealer is required to keep the same records for two years, which means the evidence in a dealer case usually exists on both sides.

Conn Law PC Represents California Car Buyers Against Dealers

Conn Law PC litigates consumer protection cases against California dealers under the Consumers Legal Remedies Act and the Unfair Competition Law, including undisclosed fees, add-on packing, financing misrepresentation, and refused refunds. If a dealer advertised one price and charged another, sold you an add-on the Act bars, or refused to honor your three-day right, contact Conn Law PC at (415) 417-2780 to find out whether you have a case.

Frequently Asked Questions

Can I cancel a new car purchase in California?

No. The three-day right applies only to used vehicles priced at $50,000 or less, and California has no cooling-off period for new vehicles.

Does the three-day right apply to a used car bought from a private seller?

No. The Act covers licensed dealers. A sale between private parties is final when you sign.

What happens if I drive more than 400 miles?

You lose the right to cancel. The 400 miles are counted from the time you sign the contract.

Can a dealer require me to buy an extended warranty to get financing?

A dealer is barred from misrepresenting the cost or terms of financing, and the Act bars charging for add-ons that give you no benefit. Ask for the financing terms in writing with and without the add-on.

Is the restocking fee taken out of my refund?

Yes. The dealer deducts the restocking fee from your refund and pays you the rest within 48 hours. You only pay the fee out of pocket when your refund is smaller than the fee, for example when you made no down payment, and in that case the difference is due when you cancel.

References and Additional Reading

August 18, 2026