Brief Overview
The CARS act imposes a statutory duty on dealers to make clear statements, quotes, and advertisements on vehicle purchase prices based on the total price of the vehicle, including disclosures of total payments, trade ins, and consequences of defaulting. Dealerships must retain these documents for at least two (2) years.
The act also imposes a statutory duty on dealers to disclose material information related to vehicle purchases, regulates add-on products by requiring that they be optional and that dealers remit payment to add-on service providers within ten (10) days, and provides consumers with a three (3) day right to cancel certain used vehicle purchases, provided the vehicle has not been driven more than 400 miles.
The CARS Act also protects consumers from being asked to give up their rights, and the remedies available for violations of the CARS Act are cumulative, meaning consumers may still pursue relief under other California consumer protection laws.
What is it?
The CARS act is California state law that was signed into law by Governor Gavin Newsom, and takes effect in October 2026. The purpose of the law is to protect consumers and combat unethical car dealership practices.
How does it work?
The CARS Act establishes clear, enforceable rules governing how dealerships advertise vehicles, communicate prices and payments, sell add-on products, and complete vehicle transactions. Instead of relying on vague, the law creates specific statutory duties for dealers. When those duties are not followed, violations are easier to identify and enforce.
The Act is best understood through its primary goals.
- Pricing Transparency – Dealer Disclosures
One of the central aims of the CARS Act is to increase pricing transparency throughout the car-buying process.
The law requires dealers to clearly and conspicuously disclose the “total price” of a vehicle, rather than advertising or negotiating based on monthly payments. The total price represents the full sale price of the vehicle, excluding certain government-imposed taxes and fees, and must be used consistently in advertising and written communications involving a specific vehicle.
Dealers must also provide written disclosures during negotiations about monthly and total payment amounts, optional add-on products/services, assumptions related to trade-ins or down payments, and whether lower monthly payments may increase total cost.
Dealers are also required to retain a copy of these pricing disclosures for at least two (2) years. These disclosures are intended to reduce bait-and-switch tactics and give consumers realistic and clear purchase options before buying.
- Deceptive Practice Prevention
The CARS act creates statutory violations when dealers materially misrepresent information related to:
- the costs or terms of purchasing, financing, or leasing a vehicle
- any costs, limitation, benefit, or any other aspect of an add-on product or service
- whether a transaction is a sale or lease,
- the availability of vehicles at total price communicated by the dealer,
among other things.
Dealers must clearly and conspicuously disclose the information above. Rather than consumers proving misrepresentation by the dealer, the act places the burden on dealerships to show that they have properly informed customers of vital information.
The CARS Act directly addresses the sale of add-on products, which have historically been a source of consumer confusion and inflated pricing.
The Act requires dealers to disclose add-ons as optional, prohibits dealers from charging for add-ons that provide no benefit to the consumer, and requires the dealer to pay the add-on service provider within ten (10) days of the purchase.
This prevents dealerships from attaching add-ons as requirements for financing, leasing, or other agreements and ensures that consumers actually receive the coverage they pay for when they pay for it.
- Consumer Protection
The CARS Act creates a significant consumer right for used car buyers.
Under the statute, used car buyers have three (3) days to cancel a purchase of a used car, if the price of the vehicle is less than fifty thousand dollars ($50,000) and the vehicle has been driven less than four hundred (400) miles by the purchaser.
Purchasers may be subject to a restocking fee up to $700 but cannot be denied this remedy as long as the requirements above are met. This gives consumers time to reconsider and reevaluate purchases and reduces the pressure of being locked into unfavorable deals.
- Remedies
The CARS Act emphasizes that consumer rights under this law cannot be waived.
In addition, remedies for violations of the CARS Act are cumulative. This means that a violation may also support claims under other California consumer protection laws.
Why the CARS Act Matters for Consumers and Attorneys
For consumers, the CARS Act means more transparency, fewer hidden fees, greater protection from deceptive sales tactics, and a real chance to reconsider certain used car purchases.
For attorneys, the law provides clear, enforceable rules that make improper dealership conduct easier to identify and litigate. By spelling out what is unlawful, the CARS Act strengthens consumer claims and changes how auto sales and leasing disputes are evaluated in California.
Ultimately, the CARS Act strengthens consumer bargaining power through transparency, equips attorneys with clearer standards to enforce consumer rights, and streamlines both the car buying process and the legal mechanisms that support it.
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