When purchasing a vehicle in California, consumers are protected by a set of laws designed to ensure fairness and transparency in dealings with car dealerships. These regulations govern nearly every aspect of the transaction, from advertising and contracts to specific protections for used car buyers. Understanding these laws can help you navigate the complexities of buying a car and recognize when a dealer’s practices may be questionable.
Dealership Advertising and Pricing Transparency
California law mandates that car dealerships adhere to strict advertising standards to prevent misleading consumers. When a dealer advertises a specific vehicle, the advertisement must include the vehicle’s model, model-year, and either its license plate number or Vehicle Identification Number (VIN). If a vehicle was previously used as a demonstrator, rental, or service vehicle, this history must be clearly disclosed in the advertisement.
The advertised price of a vehicle must be the total price a buyer will pay, including all costs except for government taxes and fees, finance charges, and optional items. This rule prevents dealers from luring customers with a low price and then adding undisclosed charges. Any dealer-added products or services must be presented as optional, and the dealer must clearly state the price of these add-ons. The law also prohibits advertising free merchandise contingent on a vehicle purchase and making unsubstantiated claims like “we have the lowest prices.”
Understanding Your California Car Purchase Contract
California law specifies what a purchase contract must contain to be valid. The Rees-Levering Automobile Sales Finance Act requires that all conditional sale contracts be in writing and signed by both the buyer and the seller.1California Public Law. California Civil Code section 2982 (2025) This law is designed to protect buyers by ensuring all terms of the agreement are clearly documented, preventing verbal misunderstandings from becoming disputes.
A valid contract must provide a detailed itemization of the amount financed, including:
- The cash price of the car
- Charges for service contracts or theft deterrents
- Taxes
- Fees for registration and pollution control certification
The contract also needs to clearly state the down payment, trade-in value, finance charge, and the total sale price. Any promises made by the salesperson should be written into the contract to be enforceable.
Specific Protections for Used Car Buyers
When purchasing a used car in California, buyers are afforded several specific protections. Under the Federal Trade Commission’s Used Car Rule, dealers must display a “Buyers Guide” on the window of each used vehicle offered for sale.2eCFR. 16 CFR Part 455 — Used Motor Vehicle Trade Regulation Rule This guide must state whether the vehicle is being sold with a warranty or “as-is.” If it is sold with a warranty, the guide must summarize the terms and duration of the coverage.
In California, there are additional rules for vehicles advertised as “certified pre-owned” (CPO). State law prohibits dealers from labeling a car as certified if it has a known odometer discrepancy, a branded title like “salvage,” or has sustained significant frame damage. Before selling a CPO vehicle, the dealer must provide the buyer with a completed inspection report. A dealer cannot sell a vehicle as “certified” if it is also being sold “as-is.”
The Truth About Cancelling Your Car Purchase
In California, there is no automatic “cooling-off” period to cancel a new car contract. However, for used cars with a purchase price under $40,000, dealers are required to offer the buyer a Contract Cancellation Option Agreement (CCOA). This option must be purchased by the buyer at the time of sale.
The cost of the CCOA depends on the vehicle’s price, ranging from a maximum of $75 for a car priced at $5,000 or less, up to 1% of the purchase price for cars between $30,001 and $39,999. If you purchase the option, you have until the close of business on the second day after the sale to cancel the contract. To cancel, you must return the vehicle to the dealership in the same condition it was received, without exceeding the mileage limit specified in the agreement. Upon cancellation, the dealer can charge a restocking fee, which also has legally defined limits.
Common Unlawful Dealer Practices
California law prohibits a range of deceptive and unfair practices by car dealerships. Common examples include:
- “Bait and switch” advertising, where a dealer advertises a vehicle at a low price with no intention of selling it, instead using it to lure customers in to sell them a more expensive car.3Cornell Law School Legal Information Institute. Cal. Code Regs. Tit. 4, § 1304.1 – Bait and Switch Advertising
- Odometer fraud, which involves tampering with a vehicle’s mileage reading to deceive a buyer about its usage.4Justia. Article 10. Odometers :: Vehicle Code :: 2010 California Code
- “Yo-yo financing,” where a dealer lets a buyer take a car home, only to call them back claiming the financing fell through, pressuring them into a new, less favorable loan.
- Packing payments with unwanted add-ons like extended warranties or alarms without the buyer’s explicit consent.
- Misrepresenting a vehicle’s history, such as failing to disclose prior accident damage or a salvage title.
Your Options if a Dealer Violates the Law
If you believe a car dealership has acted unlawfully, first try to resolve the issue directly with the dealership’s management. If that fails, you can file a formal complaint with the California Department of Motor Vehicles (DMV) Investigations Division. The DMV can investigate and penalize dealers but cannot force them to provide you with restitution.
For direct relief, you may consider legal action. The California Consumer Legal Remedies Act (CLRA) allows you to sue for damages, contract rescission, and attorney’s fees if you win. Before filing a lawsuit under the CLRA, you are required to send the dealer a demand letter via certified mail, giving them 30 days to correct the violation. You can also file complaints with your local District Attorney’s office or the Better Business Bureau.