The stress associated with buying a car has been a source of concern for consumers for decades. Consumers have complained of being pressured to buy quickly, having trouble understanding the financial terms of their loan, and the fear of making a bad decision while purchasing a vehicle. All of these factors lead many consumers to question their purchase the moment they drive away from the dealer.
The system is working against the consumer
Consumer advocates argue that for decades, the system has worked in favor of the automobile dealerships and against the consumer. If a consumer experiences “buyer’s remorse,” they have few options to protect themselves.
However, in recent years, consumer advocacy groups have increased their complaints regarding the practices of automobile dealerships regarding how automobiles are marketed, advertised, and sold. Consumers have reported hidden fees, false advertising, and pushy salesmen and women who sell additional items to the consumer at the point of sale. Lawmakers have viewed the act of purchasing a vehicle as both a business transaction and a consumer rights issue as it relates to affordability.
As lawmakers across the nation begin to assess the laws that govern the automobile sales process, several states have begun to evaluate existing car sales regulations. California, due to the size of its automobile market and its history of protecting consumers through legislation, has emerged as the testing ground for the type of reform.
Introducing CARS – An act to change how car purchases are made
Industry publications and automotive media reports out of Washington, D.C., indicate that California recently passed the California Combating Auto Retail Scams (CARS) Act, formally known as California Senate Bill 766. On October 25, 2025, Governor Gavin Newsom signed the CARS Act into law. This Act significantly changes the process of returning a vehicle in California after a purchase.
One of the most significant components of the Act provides for a three-day “cooling off” period for drivers of certain used vehicles purchased from a licensed dealer.
During the three days, the driver may cancel their purchase and receive a full or partial refund depending on the amount of time the vehicle was driven and whether it had sustained damage. A used vehicle priced less than $50,000 qualifies for the “cooling off” period if it has not been operated over 400 miles and/or has not sustained any damage.
Giving consumers the right to cancel a purchase and receive a refund based on “buyer’s remorse”
There is no need to prove fraud or that the vehicle has any mechanical defects. Dealerships may charge a maximum restocking fee of $600 to offset administrative costs incurred when processing a return. Additionally, the Act prohibits so-called “valueless” add-ons (i.e., services and warranties that provide no value) and requires dealers to list the total price of a vehicle in advertisements and quotes.
Importantly, the “cooling-off” period only applies to used vehicles purchased from licensed dealers. Transactions involving private parties and most new vehicle purchases are excluded from the provision. The exclusion reflects the legislature’s belief that the risk of buyer’s remorse and disputes is greatest among those segments of the market.
Dealerships have until October 1, 2026, to comply with the CARS Act
The CARS Act will alter the dynamics of the car-buying process in California. Knowing that there is a limited time to reconsider a purchase may alleviate some of the pressure experienced during the car-buying process. Additionally, it will likely promote more informed car-buyers.
Conversely, the Act will create additional regulatory burdens and operational costs for dealerships; however, it will reward dealerships that conduct business transparently and ethically. It remains to be determined if other states will follow California’s example. As of now, the CARS Act serves as a clear indication that in California, “buyer’s remorse” is no longer merely an emotional problem—there are legal remedies available to the consumer.
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