California’s CARS Act Takes Effect October 1: A 3-Day Right to Return Used Cars, Honest Total Prices and Limits on Junk Add-Ons

September 29, 2026
Posted by AmyGinsburg

Buying a car in California is about to change. On Thursday, October 1, 2026, the California Combating Auto Retail Scams (CARS) Act takes effect. The law, Senate Bill 766 by Sen. Ben Allen, was signed by Governor Newsom on October 6, 2025, and is now codified at California Civil Code sections 1784.20 through 1784.44. It targets the tactics we see most often in dealer-fraud cases: advertised prices that don’t hold up, add-ons slipped into the contract, and “you can’t back out now” pressure on used-car buyers.

Car dealers across the state have spent the past few weeks rushing to update their ads, forms and sales processes before the deadline. Here’s what the law actually requires, based on the statute itself, and what it means if you’re shopping for a car.

Why California wrote its own law

The CARS Act borrows heavily from a federal rule of the same name. The Federal Trade Commission adopted its CARS Rule in January 2024, but in January 2025 the U.S. Court of Appeals for the Fifth Circuit vacated it on procedural grounds, finding that the FTC skipped a required advance notice of proposed rulemaking. That left car buyers without the federal protections. California’s legislature responded by putting similar rules, plus a used-car cooling-off period, into state law.

What the CARS Act requires starting October 1

The total price, up front. Any ad that references a specific vehicle, or states a price or financing term for one, must show the vehicle’s total price. So must the dealer’s first written response to you about a specific car, such as an email or text. “Total price” includes dealer markups and any items already installed on the car. It excludes taxes and government fees, and it can’t be reduced by rebates. The dealer must keep that first communication for two years and give you a copy if you ask in writing.
Add-ons must be labeled optional. If a dealer discusses an add-on in writing during negotiations (a service contract, GAP, paint protection and so on), it must state at least once, clearly and in writing, that the add-on is not required and you can buy or lease the car without it. If you negotiate primarily in Spanish, Chinese, Tagalog, Vietnamese or Korean, that disclosure must also be in that language.
No charging for add-ons that don’t benefit you. The statute’s examples include oil changes for an electric vehicle, nitrogen tire fills below 95% purity, catalytic-converter markings on a car that has no catalytic converter, a service contract that is void because of pre-existing damage, a non-compliant GAP agreement, and a paint “protection” product that voids the factory paint warranty.
The full cost of a monthly payment. If a dealer quotes a monthly payment in writing, it must also tell you the total amount you’ll pay over the full term at that payment, plus any down payment or trade-in value the quote assumes. If it pitches a lower monthly payment, it must disclose that lower payments often mean paying more overall.
No misrepresentations. It’s a violation to misrepresent material facts about costs and financing terms, add-ons, whether you’re signing a lease or a purchase, whether you were “pre-approved,” what happens to your down payment or trade-in if the deal falls through, when your trade-in loan will be paid off, and when the car can be repossessed.

The new 3-day right to cancel a used-car purchase

The biggest change for everyday buyers is a true cooling-off period for used cars. Under prior law, buyers had to pay extra for an optional two-day “contract cancellation option.” The CARS Act repeals that system and replaces it with an automatic right:

Who’s covered: retail buyers and lessees of a used vehicle priced at $50,000 or less from a California dealer. It does not apply to new cars, auction sales, a lessee buying out the car they already have, fleet and commercial purchases, or motorcycles.
How long you have: three calendar days, starting the day after you sign. If the third day falls on a day the dealership is closed, you get until the next day it’s open. The right ends at close of business on the last day.
Mileage limit: you lose the right if you’ve driven the car more than 400 miles since signing.
What it costs: the dealer may charge a restocking fee of 1.5% of the sale price, with a minimum of $200 and a maximum of $600. If you’ve driven more than 250 miles, it can add $1 per mile over 250, up to $150 more. The fee can be taken out of your refund.
How to use it: personally return the car to the dealer during business hours, in the same condition (reasonable wear and tear excepted), with anything else you received in the deal.
What you get back: the dealer must cancel the contract and refund you within 48 hours (longer if you paid by check). It must return your trade-in. If it already sold or started transferring the trade-in, it must pay you the greatest of the agreed trade-in value, the price it sold the car for, or its fair market value, minus any loan you still owed on it.

Dealers must print a warning on the first page of the contract and give you a separate form titled “3-Day Right to Cancel Used Car Purchase or Lease.” It’s also a violation for a dealer to stall or discourage a cancellation, overcharge the restocking fee, hold on to your down payment or trade-in, make unsupported damage claims, or say the person who can process your refund “isn’t available.”

If you live outside California

These rules apply only to California dealers. With the federal CARS Rule vacated, buyers in Pennsylvania, New Jersey, Maryland, Texas, Tennessee, Arizona, Florida and Wyoming generally don’t have an automatic right to return a car, and the FTC’s door-to-door “cooling-off rule” doesn’t cover cars bought at a dealership. Every one of these states still has consumer-protection laws against deceptive sales practices, though, and many dealer-fraud claims (hidden add-ons, falsified credit applications, undisclosed damage, trade-in payoff failures) can be brought under those laws, along with lemon laws and federal warranty law.

What to do now

Save everything in writing. Screenshot the online listing and keep the dealer’s first email or text. Under the new law, the total price there should match what you’re asked to pay.
Read the add-on disclosures. If a salesperson says GAP or a service contract is “required,” ask them to put it in writing. Under the CARS Act, the dealer has to tell you in writing that it’s optional.
Get an independent inspection within the 3 days. If you buy a used car, have a mechanic look at it right away. Keep your miles under 400 and note the deadline.
Cancel in person and get a receipt. The dealer must give you an itemized receipt showing the date and time you cancelled and every deduction.
Report violations. You can file a complaint with the California Attorney General or the DMV. The CARS Act says a consumer can’t waive its protections, and its remedies are in addition to other laws, so a violation may also support claims under California’s other consumer statutes.

Ginsburg Law Group represents car buyers in dealer-fraud, lemon-law and auto-finance disputes. If a dealer packed your contract with add-ons, refused to honor an advertised price, or won’t let you cancel a used-car purchase, contact us for a review.

This article is for general informational purposes only and is not legal advice. It summarizes California Civil Code sections 1784.20 through 1784.44 as operative October 1, 2026. Courts and regulators have not yet interpreted the new law, and the facts of each transaction matter. Consult a licensed attorney about your specific situation.