California lawmakers have passed legislation to make the purchase of a car less risky and affordable. Governor Gavin Newsom signed the bill into law in December 2025. California residents wondering about the new car-buying rules can learn everything about them here.
The President’s tariffs have increased the price of cars, and now the state has introduced some changes that can provide relief, especially for used car buyers. The law allows the buyers to get their refund if the sold used vehicle is defective within three days.
The state lawmakers introduced the new rules under the California Combating Auto Retail Scams Act, or SB 766. It is built on existing rules that allow the residents to have transparency when they buy or lease a car.
What does the new California car-buying provision say?
Under the California car-buying rules, the residents can find the following provisions that can bring big changes for buyers:
- Price Disclosure: The car dealers must be transparent while selling or financing the vehicles to the customers. The dealers must disclose the total price in the advertisement if it is mentioned for sale and share the price in the first written communication.
- Add-on product limitations: The provisions prohibit the dealers from charging an add-on on the products or for services that do not offer any benefit to the buyers or lessees.
- 3-day cooling period: The provision says the customer has the right to cancel the retail sale or leases for used vehicles bought at $50,000 or less within three days of purchase without paying any extra money. Buyers can return and refund the vehicle within 3 days for any reason, under the following conditions:
- The vehicle must not be driven above 400 miles.
- If it is driven above 250 miles, the dealer can charge you some extra charges.
- You may have to pay the restocking fee between $200 and $600, but it should not exceed more than 1.5% of the vehicle sales price.
What are the current return policies in California?
The state has never had a cooling-off period for used or new cars, but it did have some limited return possibilities. Before you understand the effect of new laws, and understand what this current law says about the return policies:
- Under the state Car Buyer’s Bill of Rights, the car dealers must provide the contract for cancelling the purchase within two days with a fee between $75 – $400, if the used vehicle was priced less than $40,000.
- The lemon law of the state says the carmakers must repurchase or replace the model if they can’t fix the problem in the car within the car warranty period. However, the Lemon Law was not applied to used car buying.
How did this provision help the car buyers?
California is the first state to have a cooling-off period on the purchase of a new or used car. The new car-buying rules will affect the car buyers in the following way:
- The new rules will offer transparency to the buyers as dealers have to disclose the total price in writing on all advertisements or online websites.
- The first time communication should disclose the total price, so they do not fall into any trap of rush buying without knowing the full payment.
- The total price of the cars must include the destination charges; however, it excludes government fees, maintenance contracts, insurance, and processing fees.
- The cooling-off period will give the buyers enough time to get the used vehicles checked and reconsider their decision based on the car’s condition.
- Car buyers, especially first-time buyers, can have confidence in having transparency when they are buying the car, as they have never negotiated with dealers.
When will the new car-buying rules be effective?
According to the current status, the legislation has been signed into law, and it will be effective from October 2026. Since the new rules will need a change in dealership operations, such as to ensure the disclosure of price, advertisement, etc., the dealerships may need time to implement and comply with the laws.
The dealers would need to review their system and software to ensure all the rules are met, and the residents can exercise their rights. The implementation of the new law requires the carmakers, dealers, and staff corporations to ensure that they achieve their goal.
The new California car-buying rules and other provisions will help car buyers to have less risk while buying a car and ensure they have full transparency, so that their hard-earned money is spent wisely.
