California Enacts New Car-Buying Rules with Return Policy

California has introduced significant updates to its car-buying regulations this year. The new rules include a return policy, enabling buyers to get a refund on defective vehicles and return used cars within three days.

Key Changes to California Car-Buying Rules

These changes follow extensive lobbying from auto manufacturers, dealers, and consumer groups. With car prices remaining high, further legislative disputes may arise as early as 2026.

New Return Policy

Governor Gavin Newsom signed Senate Bill 766, establishing a groundbreaking return policy. Buyers can return used vehicles priced under $50,000 for a full refund within three days of purchase. Dealers can charge a restocking fee for returned vehicles.

Additional Buyer Protections

The legislation aims to enhance buyer protection. Key aspects include:

• Dealers must disclose the true price of a vehicle in advertisements and communications.
• Full financing costs and lease terms must be communicated to potential buyers.
• Charges for add-ons with no clear benefit to buyers are banned.

Rosemary Shahan from Consumers for Auto Reliability and Safety emphasized the importance of this legislation, highlighting its potential to make car purchases more affordable.

Implementation Delays

The new law takes effect in October to allow dealers time to adjust their systems. Brian Maas, president of the California New Car Dealers Association, expressed optimism about the increase in transparency from the new regulations.

Controversies Surrounding New Regulations

In a separate move, Newsom vetoed a proposal to increase document-processing fees for dealers. Senate Bill 791 would have raised these fees significantly, but was rejected due to the lack of new state requirements imposed on dealers.

Changes to California’s Lemon Law

Another notable legislative change is the signing of Senate Bill 26, which modifies lemon law protections for buyers. This law permits manufacturers to opt out of certain updates to the lemon law, leading to varying protections based on the vehicle brand.

The revisions to the lemon law originated in 2024, intending to lessen litigation against major manufacturers due to frequent allegations of selling defective vehicles. However, the changes have faced opposition from companies with fewer claims, such as Toyota and Honda, which believe these alterations unfairly disadvantage them.

As California leads the way in automotive consumer protection, the implications of these new laws for vehicle purchasers and dealers will be closely monitored in the coming years.