Frequently Asked Legal Questions | Do I Have a 3-Day Right to Rescind?

A:     It depends.  Prior law provided no automatic right to cancel a contract to purchase a new or used car, motor home, boat, hot tub or most other products sales agreements.  Since 2006, however, the California Car Buyer's Bill of Rights was enacted, requiring Dealerships to offer to sell the Buyer a 2-day contract cancellation option, on all used vehicles priced under $40,000.00, allowing the Buyer to cancel the contract within 2 days.* 

             

       Effective October 1, 2026, a new Act went into effect.  It is California Senate Bill 766, known as the California Combating Auto Retail Scams (CARS) Act, Civil Code section 1784.20, et seq., and others.  Now, buyers and lessees of used vehicles, under 10,000 lbs., priced at or under $50,000, receive a mandatory 3-day return window for a full refund, minus a restocking fee.** The vehicle must not have been driven more than 400 miles, If the vehicle has been driven over 250 miles, the dealer may also charge the buyer or lessee an additional one dollar ($1) for each mile over 250 miles, but this amount shall not exceed one hundred fifty dollars ($150).

 

       Further, dealerships are now prohibited from selling add-ons that are of no benefit to the buyer/lessee, and must provide a written disclosure that the add-on is not required and the consumer can purchase or lease the vehicle without the add-on.**

 

       With respect to conditional sale contracts (financed, not cash sale) there is normally a Seller's Right to Cancel provision, allowing the Dealership a ten (10) day right to cancel if the dealership cannot obtain lender financing as planned, but there is a new requirement that a dealer may not misrepresent whether any consumer has been or will be preapproved or guaranteed for any product, service, or term, so how that changes existing law is unknown.

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       However, misrepresentation during the sale negotiations usually provides the basis to rescind the contract and get your money back under the California's Consumers Legal Remedies Act, among other laws.

 

       Still further, in the event a customer obligates themself to purchase, or receive possession of, a motor vehicle pursuant to a contract or purchase order, and the dealer knows that the customer intends to obtain financing from a lender without the assistance of the dealer, and the customer is unable to obtain such financing, the contract or purchase order shall be deemed rescinded and all consideration thereupon shall be returned by the respective parties without demand.
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* Enacted in 2006, the California Car Buyer's Bill of Rights required Dealerships to offer to sell the Buyer a 2-day contract cancellation option, on all used vehicles priced under $40,000.00, allowing the Buyer to cancel the contract within 2 days. (Click link for more information). Car Buyer's Bill of Rights

** One and one-half percent of the sale price of the vehicle, but not less than two hundred dollars ($200) and not more than six hundred dollars ($600).

*** “Add-on” or “add-on product or service” means any product or service not provided to the purchaser or lessee or installed on the vehicle by the vehicle manufacturer and for which the dealer, directly or indirectly, charges a purchaser or lessee in connection with a vehicle sale, lease, or financing transaction.