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Used Car Sales Laws in California

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It is well established that cars generally are not good investments and lose value as soon as the buyer drives the vehicle off the car lot. New car buyers do not have to worry about latent defects that existed prior to purchasing the car since their new bill of sale provides them with warranties.

With the enactment of California’s lemon law in 2020, some used car buyers can have similar reassurances of operability.

Sales Laws in California

 

Car Buyer’s Bill of Rights

California’s legislature enacted this bill to help buyers receive some consumer protections from licensed California car dealers. The law does not apply to commercial-use vehicles, off-road vehicles, RVs, motorcycles or vehicles sold by private individuals.

California residents buying used cars from dealerships can have a two-day cooling-off period to cancel their bill of sale.

 

Invoice Accounting and Inspection Report

Dealers must provide both used and new car buyers an itemized accounting or price list for warranties, insurance and any other charges if the buyer obtains a loan to purchase the car. Dealers must provide written disclosures as required under California Civil Code Section 2982.2.

Some of the protections under the certification requirements include the dealer’s inspection report. It is illegal for a dealer to certify a vehicle that does not properly indicate an accurate odometer reading or that has suffered damaged. It is also illegal for the seller to withhold a complete inspection report from the buyer.

 

Certifications

Dealers are prohibited from charging excess fees for providing used car loans and must provide buyers with a “Notice to Vehicle Credit Applicant” disclosure document, which provides notice information to buyers about how credit scores are used, credit reporting agency disclosures and installment payment price disclosures.

 

Cancellation Within Two Days

Buyers have two days to cancel their sales transactions if they buy a contract cancellation option from a used car dealer. Used car dealers who sell cars that cost less than $40,000 must provide the cancellation option to purchasers for a limited fee.

Car dealers may not charge more than $75 for the purchase price contract if the car does not cost more than $5,000. Additional caps apply to cars that cost more than $5,000.

 

Buyer’s Rights

Buyers who purchase the cancellation option have until the end of the business day on the second business day to bring the car back for a full refund, minus the purchase price of the cancellation option.

Dealers must provide buyers with a full refund of fees, including taxes, deposits, trade-in vehicles, registration fees and any other fees they charged the buyers if the buyers request a refund within the two days. Dealers do not have to refund the price of the cancellation option a buyer purchased.

Dealers can charge a buyer the maximum fee for restocking the vehicle. Additionally, if buyers do not return the car within the two-day allowance, then dealers does not have to accept the vehicle but must provide a written notice of its non-acceptance.

 

Considerations

Since consumer protection laws can frequently change, you should not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your jurisdiction.

 

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