A new law in
Car Buyer's Bill of Rights effective from July 1, 2006, affects retail vehicle sales handled by licensed car dealers in California.
This law does not apply to
Motorcycles
Off-highway motor vehicles
Transactions between private parties
Major changes in Car Buyer's Bill of Rights are as the following:
For new and used car buyers, the dealer
Must provide an itemized price list for items such as warranties and insurance, etc., if the items are being financed
Compensation from an institution financing the purchase of a vehicle is limited to no more than 2 percent for a loan term over 60 months and 2.5 percent for a loan term of 60 months or less
Must provide buyers with their credit score and an explanation of how it is used
For used car buyers:
Only a used car buyer may obtain a two-day sales contract cancellation option
Used cars advertised as "certified" must meet specific requirements
Used car buyers may purchase a two-day sales contract cancellation option: Consumers who purchase a used car for less than $40,000 must be given an opportunity to purchase a two-day Contract Cancellation Option Agreement.
The contract cancellation option does not apply to used cars priced at $40,000 or more, new cars, private party sales, motorcycles, off-road vehicles, recreational vehicles, or vehicles sold for business or commercial use
If you choose to return the vehicle, within the time specified, the dealer can charge a maximum restocking fee
If the contract cancellation fee was charged, it must be deducted from the restocking fee
The contract cancellation option allows the buyer to return the vehicle:
To the dealer by close of business within two days, or according to the contract
With no miles in excess of those permitted by the contract: The dealer may limit the number of miles but it may not be a number less than 250 miles
With all original receipts of the sales and cancellation option contracts
In the same condition as it was received, except for reasonable wear and tear and any defects or mechanical problems occurring after the buyer takes possession of the vehicle
Free of all liens and encumbrances, not allowed in the sales contract
If the buyer has not returned the vehicle by the standards set above, the dealer has the right to refuse to accept return of the vehicle; however, written notice must be provided to the buyer.
On return of the car the dealer must give the buyer:
A full refund, including sales tax, any registration fees, and any deposit or trade-in vehicle collected from the buyer: The fee charged for the contract cancellation option is non-refundable.
If the dealer did not charge for the option and has sold or transferred title to the vehicle that the buyer used as a down payment or trade-in, the fair market value or value stated in the sales contract, whichever is greater, must be refunded
The dealer must perform a complete inspection of the vehicle and must provide consumers with a copy of the inspection report. Used cars advertised as "certified" must meet specific requirements
A vehicle is not a certified used vehicle if the:
Odometer does not indicate the actual mileage of the vehicle
Vehicle was purchased under state or federal warranty law, that is, it is repurchased by the manufacturer or dealer
Vehicle was damaged by accident, fire, or flood unless repaired to safe operational condition prior to sale
Title was branded as a Lemon Law Buyback, manufacturer repurchase, salvage, junk, non-repairable, flood, or similar designation.
Vehicle has frame damage or was sold "as is"
Seller failed to provide the buyer with a complete inspection report of all components inspected
Inquire as to why the vehicle could not be certified.
The dealer must provide a document indicating the price of specified items purchased and the effect of those items on installment payments. (Civil Code 2982.2)
Items requiring disclosure are as the following:
A service contract
An insurance product
A debt cancellation agreement/gap insurance
A theft deterrent device,
A surface protection product
A vehicle Contract Cancellation Option Agreement
No charges may be added to the contract without the full disclosure and without your consent. The document must advise you of the cost of the monthly installment payments with and without items listed.
If a dealer obtains financing on your behalf, the dealer compensation from an institution financing the purchase of a vehicle is limited to no more than:
2 percent of the purchase amount for contracts with a term of more than 60 months
2.5 percent of the purchase amount for contracts with a term of 60 months or less
This limitation does not apply when the assignment
Requires the dealer to bear the entire risk of financial performance for you
Is more than six months after the date of the conditional sale contract
Dealers must provide a Notice to Vehicle Credit Applicant document, which discloses:
The credit score obtained and used by the dealer and the name of the credit reporting agency providing the credit score to the dealer
The range of possible credit scores established by the credit reporting agency that provided the credit score
The address and telephone number of each credit reporting agency providing a credit score that was obtained and used by the dealer
If the dealer fails to comply with the Car Buyer's Bill of Rights, you may complete and mail a Record of Complaint Form (INV 172A) to the Department of Motor Vehicles. The form provides the addresses of DMV Investigations District Offices.
