The California Car Buyer's Bill of Rights

This information has been adapted from the Consumers for Auto Reliability and Safety website with their permission.  For more information on this excellent organization, please go to


California car buyers have important new rights beginning July 1, 2006. The Car Buyer’s Bill of Rights will change the way millions of cars are bought and sold in California.  The new law applies to motor vehicles bought in California from a dealer for personal, family or household use, including cars, minivans, SUVs and trucks.  The new law does not cover private sales between individuals, leased autos, vehicles purchased or registered in another state, commercial vehicles, recreational vehicles and motorcycles.  What follows is a summary of the most pertinent changes to the law that have been brought into effect by the Car Buyer's Bill of Rights.

Used car protections

The Car Buyer's Bill Of Rights provides a two-day return option on used cars, which you can buy from the selling dealership when you purchase a used vehicles that costs $40,000 or less.

If you get the option, you can return the vehicle by the deadline for any reason, such as:

√ You did not get the car inspected yet by your own trusted technician.
√ You are buying the car “as is.”

Returning a car under the option

Dealers can charge buyers for the return option—and a restocking fee if you return the car.  The charges and fees are calculated as follows:

Where the purchase price is $5,000 or less, the return option charge cannot be greater than $75.00. The maximum restocking fee is $175.00 and the $75.00 return option charge must be applied toward any restocking fee. 

Where the purchase price is between $5,000 and $10,000, the return option charge cannot be greater than $150.00. The maximum restocking fee is $350.00 and the $150.00 return option charge must be applied toward any restocking fee. 

Where the purchase price is between $10,000 and $30,000, the return option charge cannot be greater than $250.00. The maximum restocking fee is $500.00 and the $250.00 return option charge must be applied toward any restocking fee. 

Where the purchase price is between $30,000 and $40,000, the return option charge cannot be greater than 1% of the purchase price (in other words, it should fall between $300.00 and $400.00). The maximum restocking fee is $500.00 and the $300.00 to $400.00 return option charge must be applied toward any restocking fee. 

To return the car, you must

√ Drive the vehicle fewer than 250 miles. Exception: If the dealer gives you written permission to drive it farther.

√ Return the vehicle within two days. Exception: If the dealer gives you written permission to have more time.

√ Make sure the vehicle is in the same condition it was when you bought it. Exceptions: Reasonable wear and tear. Defects or problems you didn’t cause.

√ Make copies of the contract and other purchase documents because you are required to deliver your originals to the dealer. Keep your copies in a safe place.

√ Return the vehicle and the original paperwork in person before the date and time noted on your contract.

√ Sign the written notice of cancellation the dealer provides and keep your copy.

√ Take good care of the car and don’t speed or abuse it. When you return the car, the dealer is allowed to charge you for damage you caused to the vehicle. To protect yourself from false claims, photograph the car inside and out before you drive it away.

√ If the dealer refuses to accept the vehicle when you return it within two days, make a note of the date, time and mileage on the vehicle. Then seek legal advice.
Tip: Some auto dealers may offer the return option and restocking fee for a lower price, or even for free. Shop around and negotiate to get the best protection for the price.


If you get the return option, the dealer must keep your trade-in until your return option expires. If your trade-in is sold early, the dealer must give you the car’s fair market value or the price listed in the cancellation agreement, whichever is more. But the dealer does not have to give you your old car until two days after you return the car you just bought.

Tip: Don’t get stuck buying an even worse car from the same dealer. The dealer does not have to offer you the return option on the next car you buy from the same dealership.

√ If possible, take a witness with you when you return the car.

√ Arrange for a ride home from the dealership, or take a taxi.

Certified used cars

Dealers call used cars that have been inspected by a mechanic “certified pre-owned vehicles.” They cannot advertise or sell certain problem cars as “certified.”  For example, the a used car cannot be sold as "certified" if the odometer has been rolled back, if the title has been branded, if the frame has been damaged, if the dealership does not provide a completed inspection report or if the dealership tries to sell the vehicle "as is."

Note: Even certified cars can still have a variety of serious, expensive problems.  It is always a good practice to any used car inspected by your mechanic before you buy.

Buyer disclosures

Under the new law, auto dealers must give you in writing:

√ The price of the vehicle without extra options and add-ons.

√ The specific price for add-ons like anti-theft devices, fabric protection, extended service contracts and “gap” insurance. These “extras” are often overpriced and unnecessary.

√ A copy of your credit score if you are getting a loan. This score is a financial “report card” based on the way you handle your loans and credit. A good credit score usually means you can get the lowest interest rates.

Limit on interest rate markups

Most auto lenders pay dealers a hidden fee to offer you a higher interest rate than you deserve based on your credit history. This extra interest is called a “markup.” It is extra profit that is split between the dealer and the lender.

The new law limits the “markup” amount dealers can get. Dealers may not receive more than 2.5% from lenders for arranging financing if your car loan is up to 60 months long, or 2% if it is longer.

Tip: To get the best rate on a car loan, check with banks, credit unions or online lenders before you shop for a car.

√ Dealers advertise “0% financing” but often charge consumers a higher rate.

√ A lower interest rate can save you $2,000-$10,000 or more in finance charges over the life of the loan.

Should I get a mechanic to look at the car I want to buy?

Yes! Before you buy a used car, get it inspected by an independent, trusted technician.

√ Today’s cars are full of sophisticated electronics. It takes a professional to spot serious problems.

√ Car Talk’s Mechanics Files ( may help you find a qualified technician. It costs about $100 for an inspection. This good investment can save you aggravation and expense.

√ If the seller tries to talk you out of getting your own inspection, walk away.
Existing consumer protections

The Text of the Car Buyer's Bill of Rights (AB 68)

INTRODUCED BY   Assembly Member Montanez (Principal coauthors: Assembly Members Bass, Dymally, Jones, Leno, Negrete McLeod, Nunez, and Ridley-Thomas. Senators Figueroa, Perata, and Speier)

JANUARY 3, 2005

An act to amend Sections 2981 and 2982 of, and to add Sections 2982.2 and 2982.10 to, the Civil Code, to add Section 6012.3 to the Revenue and Taxation Code, and to amend Section 11709.2 of, and to add Sections 11713.18, 11713.19, 11713.20, and 11713.21 to, the Vehicle Code, relating to consumers.


AB 68, Montanez  Motor vehicle sale contracts: Car Buyer's Bill of Rights.

Existing law governs motor vehicle conditional sale contracts, as defined. These provisions require sellers of motor vehicles to make certain disclosures to buyers, including that existing law does not provide for a "cooling off" period, and to disclose certain information under the label "itemization of the amount financed." A violation of these provisions is a misdemeanor.

This bill, operative July 1, 2006, would enact the Car Buyer's Bill of Rights.   

The bill would require a conditional sale contract for a motor vehicle to include a specified notice to inform the buyer of a used vehicle with a purchase price of less than $40,000 of his or her right to obtain a contract cancellation option agreement. The bill also would require the conditional sale contract to include the amount charged for a theft deterrent device, as defined, the amount charged for a surface protection product, as defined, and the amount charged for a used vehicle contract cancellation option agreement, within the listing of "itemization of the amount financed."

The bill would require a seller to provide the buyer with a specified disclosure if a conditional sale contract is used disclosing, as specified, the charge for a service contract, an insurance product, a debt cancellation agreement, a theft deterrent device, a surface protection product, and a vehicle contract cancellation option agreement.   

The bill would prohibit a seller, in consideration of an assignment of a conditional sale contract, from receiving or accepting from the assignee any payment or credit based upon any amount collected or received under the contract, or to be collected or received, in excess of specified amounts.

Existing law makes it a violation, punishable as a misdemeanor, for the holder of a dealer's license to do, or fail to do, specified actions with regard to the advertising and sale of motor vehicles.

This bill would expand those provisions to prohibit a dealer from advertising or selling a vehicle as "certified," or using similar descriptive terms to imply that the vehicle meets the terms of a used vehicle certification program, unless that vehicle meets specified criteria. The bill would make violations of this provision actionable under the Consumers Legal Remedies Act and the Unfair Competition Law, and as false advertising. The bill would also prohibit a dealer from adding charges to a sale or lease contract without the buyer's consent or inflating a payment or extending the maturity of a contract for the purpose of disguising the actual charges for goods
or services.       

The bill would require a dealer that obtains a consumer credit score, as defined, from a consumer credit reporting agency, as defined, for use in connection with an application for credit initiated by a consumer for the purchase or lease of a motor vehicle for personal, family, or household use to provide specific information to the consumer prior to the sale or lease of that vehicle.

The bill would prohibit a dealer from selling a used vehicle, as defined, having a purchase price of less than $40,000, at retail, to an individual for personal, family, or household use without first offering the buyer a contract cancellation option agreement that contains specified information. The bill would specify the rights and duties of a buyer and dealer under a contract cancellation option agreement.

Because the violation of these provisions would be a misdemeanor, the bill would create a new crime, thereby imposing a state-mandated local program.

The bill would make other technical and conforming changes.

This bill would make these provisions inapplicable to the sale or lease of a motorcycle, as defined, and an off-highway motor vehicle that is subject to identification.   

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.


SECTION 1.  (a) This act shall be known and may be cited as the "Car Buyer's Bill of Rights."

(b) It is the intent of the Legislature to place limits and restrictions on motor vehicle dealers licensed pursuant to Article 1 (commencing with Section 11700) of Chapter 4 of Division 5 of the Vehicle Code. Nothing in this act is intended to change or limit the
rights or defenses available under current law to an assignee who obtains a conditional sale contract for value without notice of any claim or defense against him or her by any other person.

(The modifications to the Automobile Sales Finance Act all deal with the new disclosure requirements when completing a sale - notice that I have underlined and put the substantive changes in bold.  You may to look at Gold Code book for a easier to read version)

SEC. 2.  Section 2981 of the Civil Code is amended to read:

2981.  As used in this chapter, unless the context otherwise requires:

(a) "Conditional sale contract" means:

(1) A contract for the sale of a motor vehicle between a buyer and a seller, with or without accessories, under which possession is delivered to the buyer and either of the following:

(A) The title vests in the buyer thereafter only upon the payment of all or a part of the price, or the performance of any other condition.

The California Car Buyers Bill of Rights Page 2

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