Key Takeaways
- California lawmakers have made significant changes to the state’s car-buying rules, including a rewrite of the lemon law and a right to return a used vehicle within three days.
- The new law allows buyers to return a used vehicle for a full refund within three days if the purchase price was less than $50,000, and dealers can charge a restocking fee.
- Car dealers will have to tell potential buyers the actual price of a vehicle, including financing costs and lease terms, and cannot charge for add-ons that have no benefit to the buyer.
- The lemon law has been watered down, allowing car manufacturers to opt out of changes that give consumers a right to get their money back if they buy a defective vehicle.
- The changes to the car-buying rules may lead to further legislative battles in 2026, particularly with regard to California’s goal of having 100% of new cars sold in the state be zero-emission by 2035.
Introduction to California’s New Car-Buying Rules
California lawmakers have made major changes to the state’s car-buying rules, including a controversial rewrite of the state law that allows buyers to get their money back if they are sold a defective vehicle and a right to return a used vehicle within three days. After an intense lobbying push this year from automobile companies, dealers, and consumer groups, more legislative battles over California vehicle purchases could follow in 2026. The changes to the car-buying rules are a significant development in the state’s efforts to protect consumers and promote the sale of zero-emission vehicles.
The Right to Return a Used Vehicle
Gov. Gavin Newsom signed Senate Bill 766, creating a first-in-the-nation policy that allows a buyer to return a used vehicle for a full refund within three days if the purchase price was less than $50,000. Dealers can charge a restocking fee. The law, which takes effect in October, also contains other protections for buyers intended to prevent them from getting suckered. For example, car dealers will have to tell potential buyers the actual price of a vehicle, including financing costs and lease terms, and cannot charge for add-ons that have no benefit to the buyer. This change is a significant victory for consumer advocates, who have long argued that car buyers need more protections when purchasing used vehicles.
The Watered-Down Lemon Law
Newsom also signed Senate Bill 26, a bill that allows car manufacturers to opt out of changes to the state’s lemon law that gives consumers a right to get their money back if they buy a defective vehicle. The result is that California car buyers have different legal protections under the state’s lemon law depending on which brand they buy. The bill Newsom signed was in response to a law lawmakers hastily passed at the end of the 2024 legislative session, watering down the state’s 55-year-old landmark lemon law. Some auto companies, namely GM and Ford, were being sued so often for allegedly selling so many lemons that state courts were clogged with lawsuits. The companies and some attorney groups persuaded lawmakers and Newsom to pass legislation in 2024 that shrank the length of time a car buyer could sue under the lemon law to just six years instead of the entire life of a vehicle’s warranty.
Implications for Car Buyers and Dealers
The changes to the car-buying rules may have significant implications for car buyers and dealers in California. On the one hand, the new law provides more protections for buyers and promotes transparency in the car-buying process. On the other hand, the changes to the lemon law may make it more difficult for consumers to get their money back if they buy a defective vehicle. Car dealers may also face more regulatory burdens and costs as a result of the new law. However, some dealers argue that the new law will make buying a used car more transparent and easier for consumers. Brian Maas, president of the California New Car Dealers Association, said the law should make buying a used car more transparent and easier for consumers, but also imposed more responsibility on dealers.
Future Legislative Battles
The changes to the car-buying rules may lead to further legislative battles in 2026, particularly with regard to California’s goal of having 100% of new cars sold in the state be zero-emission by 2035. Sen. Ben Allen, a Democrat representing the El Segundo area, said he expects California’s Democratic-controlled Legislature will likely push back against national Republicans’ attack on California’s vehicle policies in some form next year, though he said it wasn’t yet clear how. The ongoing debate over California’s car-buying rules and vehicle policies is likely to be shaped by a range of factors, including the state’s commitment to promoting zero-emission vehicles, the interests of automobile companies and dealers, and the needs and concerns of consumers. As the state continues to navigate these complex issues, it is likely that there will be further developments and changes to the car-buying rules in the years to come.