California car buyers and dealerships are approaching a major change in the state’s retail auto rules. The California Combating Auto Retail Scams Act, commonly called the California CARS Act, becomes operative on October 1, 2026. The law changes how dealers communicate vehicle prices, discuss financing, sell optional add-ons, keep transaction records, and handle cancellations of qualifying used vehicle purchases and leases.
The law, enacted through Senate Bill 766, applies to licensed California motor vehicle dealers and is designed to make key parts of a transaction more transparent. For shoppers, some of the biggest changes may become visible before they sign a contract.
The California CARS Act Starts October 1
SB 766 was approved in 2025, but its main CARS Act provisions become operative on October 1, 2026. The California Department of Motor Vehicles identifies the law as one of the state’s major 2026 consumer protection changes for vehicle transactions.
The official SB 766 chaptered bill text says the act is intended to protect purchasers and lessees of new or used motor vehicles from unfair and deceptive business practices. The new rules work alongside other California sales and financing laws.
Vehicle Pricing Must Become More Transparent
One of the biggest changes concerns the vehicle’s total price. Under the CARS Act, dealers must disclose the total price in advertisements that reference a specific vehicle for sale and in advertisements that present a monetary amount or financing term for that vehicle.
The total price must also appear in the dealer’s first written communication with a consumer when it references a specific vehicle or discusses a monetary amount or financing term. The dealer must retain that communication for at least two years and provide a copy to the customer upon written request.
For purposes of the law, total price generally includes dealer price adjustments and items already installed on the vehicle when it is advertised or communicated. Certain taxes, government fees, and specified charges are excluded. A rebate is not deducted when determining the disclosed total price.
The law also prohibits material misrepresentations involving purchase, financing, or lease terms, vehicle availability at a communicated price, financing applications, trade-in payoff information, and other required disclosures.
Financing Discussions Get Additional Disclosures
The CARS Act also focuses on the difference between a monthly payment and the total amount a buyer may ultimately pay. When a dealer makes a written representation during negotiations about a monthly payment, the dealer must disclose the total amount the consumer would pay after making the scheduled payments.
If that calculation assumes a cash down payment, trade-in value, or other consideration, the dealer must clearly disclose that amount. When written comparisons discuss a lower monthly payment, the dealer must disclose that lower monthly payments often increase the total amount paid to purchase or lease the vehicle.
Optional Add-Ons Must Be Identified More Clearly
Add-on products are another major part of the new rules. When a dealer makes a written representation during negotiations about an add-on product or service, the dealer must disclose at least once that the add-on is not required and that the consumer can purchase or lease the vehicle without it.
The law also prohibits charges for add-ons that would not provide a benefit to the buyer, lessee, vehicle, or transaction. Examples in the statute include oil changes for electric vehicles, catalytic converter marking for a vehicle without a catalytic converter, certain noncompliant GAP agreements, and service contracts that are void because of preexisting conditions.
Dealers may still offer legitimate optional products. A consumer can select a service contract or another add-on that provides a benefit. The new requirements focus on disclosure, usefulness, and whether the product is properly provided.
Qualifying Used Cars Get A Three-Day Cancellation Right
The change likely to receive the most attention is the new three-day cancellation right. Beginning October 1, a dealer generally cannot sell or lease a qualifying used vehicle at retail for $50,000 or less without providing the buyer or lessee a three-day right to cancel.
The right has limits. The vehicle cannot have been driven more than 400 miles between execution of the transaction and the attempt to cancel. It generally must be returned to the selling or leasing dealer during business hours in the required condition and with applicable items received in the transaction.
A dealer cannot charge a separate price simply for receiving the statutory right. However, a restocking fee may apply when the buyer actually cancels. The basic component is 1.5 percent of the vehicle’s sale price, subject to a $200 minimum and $600 maximum. The statute also allows a limited mileage component after 250 miles.
New Cars Do Not Get The Same Cooling-Off Period
The three-day right applies to qualifying used vehicles, not new vehicles. The law requires dealership notices explaining that California does not have a cooling-off period for new vehicles while describing the cancellation right for covered used vehicles.
California’s current Car Buyer’s Bill of Rights describes the system in place before October 1. Under the current framework, qualifying used-car buyers generally must be offered a two-day contract cancellation option agreement. The CARS Act replaces that system for covered transactions with the new statutory three-day right.
Dealers Face New Recordkeeping Requirements
Dealers subject to the CARS Act must keep records needed to demonstrate compliance for two years from the date a record is created.
Those records can include advertisements and communications showing total-price disclosures, purchase orders, financing and lease documents, relevant written communications, add-on documentation, cancellation requests, proof of refunds, trade-in return records, and certain written consumer complaints.
The recordkeeping requirement matters because many parts of the law concern what was represented or disclosed during the transaction. Retaining those records creates documentation of the information given to the consumer.
What California Car Shoppers Can Do Before October
Consumers shopping near the October 1 transition can pay attention to the date their transaction is executed and keep copies of advertisements, written price quotes, financing discussions, add-on disclosures, contracts, and trade-in documents.
After the rules become operative, shoppers can compare the advertised total price with the written information provided by the dealership. They can also review whether optional products are identified as optional and consider the total cost of financing instead of focusing only on the monthly payment.
Used-car shoppers should read the separate three-day cancellation disclosure carefully. The return period, mileage ceiling, vehicle condition requirements, restocking fee, trade-in provisions, and refund procedures can affect how the right works.
A Major Shift In California Auto Retail Rules
The California CARS Act brings several retail auto reforms together under one framework. It addresses advertised prices, written negotiations, financing information, optional add-ons, dealer representations, used-vehicle cancellations, and record retention.
For consumers, the practical change is greater visibility into important parts of the transaction. For dealerships, October 1 brings new disclosure, documentation, and transaction requirements affecting advertising, sales conversations, financing, and used-car returns.
Because the CARS Act operates alongside other California vehicle laws, individual transactions can involve additional rules and exceptions. Buyers following the changes should use current DMV information and the official California legislative text when checking the requirements that apply after October 1, 2026.
