AMENDED IN ASSEMBLY SEPTEMBER 5, 2025
AMENDED IN ASSEMBLY AUGUST 29, 2025
AMENDED IN ASSEMBLY JULY 17, 2025
AMENDED IN ASSEMBLY JULY 14, 2025
AMENDED IN ASSEMBLY JUNE 26, 2025
AMENDED IN ASSEMBLY JUNE 13, 2025
AMENDED IN SENATE MAY 23, 2025
AMENDED IN SENATE MAY 1, 2025
AMENDED IN SENATE APRIL 10, 2025
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
88
CHAPTER 354
Statutes of 2025
[ Approved by Governor October 6, 2025. Filed with Secretary of State October 6, 2025. ]
Introduced by Senator Allen
(Coauthor: Senator Stern)
February 21, 2025
An act to amend, repeal, and add Sections 2982 and 2985.8 of, and to add Title 1.5B (commencing with Section 1784.20) to Part 4 of Division 3 of, the Civil Code, to amend, repeal, and add Section 6012.3 of the Revenue and Taxation Code, and to amend and repeal Section 11713.21 of, and to amend, repeal, and add Section 11709.2 of, the Vehicle Code, relating to civil law.
Vote: majority Appropriation: no Fiscal committee: no Local program: no
LEGISLATIVE COUNSEL’S DIGEST
Existing law governs motor vehicle conditional sale contracts, as defined, and requires a seller, prior to the execution of a conditional sale contract, to make certain disclosures to the buyer, including a description and the price of each item sold if the contract includes a charge for the item, and the sum of all of those charges.
Existing law prohibits a dealer from selling specified used vehicles at retail to an individual for personal, family, or household use without offering the buyer a contract cancellation option agreement that allows the buyer to return the vehicle without cause. Existing law sets forth certain requirements for the contract cancellation option agreement, including prescribing the purchase price for the contract cancellation option and requiring specified disclosures.
This bill would enact the California Combating Auto Retail Scams (CARS) Act. The bill would define the terms “vehicle” and “used vehicle” for these purposes. The bill would make it a violation of the act for a dealer to make any misrepresentation regarding material information about specified matters relating to the vehicle sale, including the costs or terms of purchasing, financing, or leasing a vehicle, the availability of vehicles at a total price communicated by the dealer, and the remedy available if a dealer fails to sell or lease a vehicle at the total price, as defined. The bill would also make it a violation of the act for a dealer to fail to make certain disclosures clear and conspicuous, including specified information relating to the total price and any add-on products or services, and would exempt from that provision a used vehicle sold at an auction, as defined. The bill would make it a violation of the act for a dealer, in connection with the sale or financing of a vehicle, to charge for certain items, including an add-on product or service if the vehicle purchaser or lessee would not benefit from the add-on product or service. The bill would repeal the above-described contract cancellation option agreement requirement and would instead prohibit a dealer from selling or leasing specified used vehicles without providing the purchaser or lessee a 3-day right to cancel the purchase or lease, as provided. The bill would require a dealer to create and retain, for a period of 2 years from the date the record is created, all records necessary to demonstrate compliance with the act, including specified records.
The bill would make its provisions operative on October 1, 2026.
The bill would make related conforming changes.
The people of the State of California do enact as follows:
SECTION 1.
Title 1.5B (commencing with Section 1784.20) is added to Part 4 of Division 3 of the Civil Code, to read:
Title 1.5B. California Combating Auto Retail Scams (CARS) Act
Chapter 1. General Provisions
This title shall be known, and may be cited, as the California Combating Auto Retail Scams (CARS) Act.
Any waiver by a consumer of the provisions of this title is contrary to public policy and is unenforceable and void.
The provisions of this title are not exclusive. The remedies provided in this title for a violation of this title or for conduct proscribed by this title shall be in addition to any other remedies available under other law. This title does not limit or alter the remedies and liabilities set forth in other laws that may apply.
If any provision of this title or the application of this title to any person or circumstance is held to be unconstitutional or otherwise deemed to be invalid, the remainder of the title and the application of the provision to other persons or circumstances shall not be affected.
This title shall become operative on October 1, 2026.
Chapter 2. Construction and Definitions
This title shall be liberally construed and applied to promote its underlying purposes, which are to protect purchasers and lessees of new or used motor vehicles against unfair and deceptive business practices and to provide efficient and economical procedures to secure that protection.
The following definitions apply for purposes of this title:
(a) “Add-on” or “add-on product or service” means any product or service not provided to the purchaser or lessee or installed on the vehicle by the vehicle manufacturer and for which the dealer, directly or indirectly, charges a purchaser or lessee in connection with a vehicle sale, lease, or financing transaction.
(b) “Auction” means a sale transaction conducted by means of oral, written, or electronic exchanges whereby offers are solicited from one or more potential purchasers in the form of bids in an effort to advance the amount of the bids to obtain the highest and most favorable offer.
(c) “Dealer” means a licensed California motor vehicle dealer or a dealer as defined in Section 285 of the Vehicle Code.
(d) “GAP agreement” means an agreement for either of the following:
(1) To indemnify a vehicle purchaser or lessee for the difference between the actual cash value of the vehicle in the event of an unrecovered theft or total loss and the amount owed on the vehicle pursuant to the terms of a loan, lease agreement, or installment sales contract used to purchase or lease the vehicle.
(2) To waive the unpaid difference between money received from the purchaser’s or lessee’s vehicle insurer and some or all of the amount owed on the vehicle at the time of the unrecovered theft or total loss, including products or services titled “guaranteed automobile protection agreement,” “guaranteed asset protection agreement,” “GAP insurance,” or “GAP waiver.”
(e) “Material” or “materially” means likely to affect a person’s choice of, or conduct regarding, goods or services.
(f) (1) “Motor vehicle” or “vehicle” means a motor vehicle as defined by Section 415 of the Vehicle Code.
(2) Notwithstanding paragraph (1), “motor vehicle” or “vehicle” does not include any of the following:
(A) Vehicles that are sold wholesale. For purposes of this subparagraph, “wholesale” means sale of a vehicle that does not constitute a retail sale, as defined in Section 6007 of the Revenue and Taxation Code.
(B) Vehicles that are not required to be registered under the Vehicle Code.
(C) Fleet sale transactions. For purposes of this subparagraph, “fleet sale” means the sale of more than one vehicle as part of a single transaction for use primarily for business or commercial purposes.
(D) Sales to commercial purchasers. For the purposes of this subparagraph, “commercial purchasers” means a person that purchases five or more vehicles from the dealer per year for use primarily for business or commercial purposes.
(E) A vehicle that has a gross vehicle weight rating of 10,000 pounds or more.
(g) “Restocking fee” means the following fees that the dealer may charge a buyer or lessee who exercises the three-day right to cancel:
(1) (A) One and one-half percent of the sale price of the vehicle, but not less than two hundred dollars ($200) and not more than six hundred dollars ($600).
(B) In lieu of the fee in subparagraph (A), a dealer that charged the buyer or lessee a shipping fee for transporting the vehicle may retain the cost the dealer actually incurred for shipping, provided that the amount retained does not exceed the amount that would otherwise be permitted under subparagraph (A). The dealer shall refund to the buyer or lessee the balance, if any, between the amounts charged and retained.
(2) If the vehicle has been driven over 250 miles, the dealer may also charge the buyer or lessee an additional one dollar ($1) for each mile over 250 miles, but this amount shall not exceed one hundred fifty dollars ($150).
(h) “Service contract” includes products that provide consumers with some type of benefit or payment for repair, maintenance, or service on the vehicle purchased or leased.
(i) (1) “Three-day,” as used in the phrase “three-day right to cancel,” means the period in which a buyer or lessee of a used vehicle may exercise the right to cancel the purchase or lease as provided in Section 1784.43. Except as provided in paragraph (2), this period consists of the three calendar day period commencing the calendar day after the purchase or lease is executed.
(2) If the third day in the three calendar day period described in paragraph (1) falls on a day the dealership is closed to the public, the three-day right to cancel period extends to the next day the dealership is open to the public.
(3) The three-day right to cancel ends at the close of business on the last day of the period described in this subdivision.
(j) (1) “Total price” means the total sale price of a vehicle, excluding the taxes, fees, and charges described in subdivision (e) of Section 11713.1 of the Vehicle Code.
(2) “Total price” includes any dealer price adjustment and the cost of any item installed on the vehicle at the time of the advertisement or communication.
(3) “Total price” does not include any deduction for a rebate.
(k) (1) “Used motor vehicle” or “used vehicle” means a vehicle, as defined by subdivision (f), that also satisfies the definition of a “used vehicle” as defined in Section 665 of the Vehicle Code.
(2) “Used motor vehicle” does not include a motorcycle, as defined in Section 400 of the Vehicle Code.
Chapter 3. Prohibited Conduct and Consumer Rights
It is a violation of this title for any dealer to make any misrepresentation regarding material information about any of the following:
(a) The costs or terms of purchasing, financing, or leasing a vehicle.
(b) Any costs, limitation, benefit, or any other aspect of an add-on product or service.
(c) Whether the final contract is for the lease or sale of a motor vehicle. This subdivision shall not be construed to restrict the ability of a dealer to present multiple financing and lease payment options to the customer prior to the sale or lease of a motor vehicle.
(d) The availability of vehicles at a total price communicated by the dealer. A dealer is not in violation of this subdivision if the advertisement in question is withdrawn following the sale of the vehicle in compliance with subdivision (c) of Section 11713 of the Vehicle Code.
(e) Whether any consumer has been or will be preapproved or guaranteed for any product, service, or term.
(f) Information on or about a consumer’s application for financing.
(g) Whether the dealer will keep cash downpayments or trade-in vehicles, charge fees, or initiate legal process, or any action if a transaction is not finalized or if the consumer does not go forward with the transaction.
(h) Whether, and if so, when, a dealer will pay off some or all of the financing or a lease on a consumer’s trade-in vehicle, and what happens if a dealer fails to pay off the trade-in vehicle within the time period required by Section 11709.4 of the Vehicle Code.
(i) The remedy available if a dealer fails to sell or lease a vehicle at the total price.
(j) Whether the dealer or any of the dealer’s personnel or products or services is or was affiliated with, endorsed or approved by, or otherwise associated with the United States government or any federal, state, or local governmental agency, unit, or department, including the United States Department of Defense or its military departments.
(k) Whether, or under what circumstances, a vehicle may be repossessed.
(l) Whether a vehicle can be moved outside of California or outside of the United States.
(m) Any of the required disclosures identified in this title.
It is a violation of this title for any dealer to fail to make any disclosure required by this section clearly and conspicuously.
(a) In connection with the sale or financing of a vehicle, a vehicle’s total price shall be disclosed as follows:
(1) In any advertisement that references a specific vehicle for sale.
(2) In any advertisement that represents any monetary amount or financing term for a specific vehicle.
(3) In the first written communication with a consumer that includes a reference regarding a specific vehicle for sale, or any monetary amount or financing term for any vehicle. With respect to the first written communication, both of the following apply:
(A) The total price for the vehicle shall be disclosed at least once in the dealer’s first response regarding that specific vehicle to the consumer.
(B) A dealer shall retain a copy of the communication identified by this paragraph for at least two years and shall provide a copy of the communication to the customer upon written request.
(b) When making any written representation during the negotiation to purchase or lease a specific vehicle about an add-on product or service, the dealer shall disclose at least once that the add-on is not required and the consumer can purchase or lease the vehicle without the add-on. This disclosure shall be in writing and shall be clear and conspicuous. If the transaction is negotiated primarily in a language identified by subdivision (b) of Section 1632, the disclosure required by this paragraph shall also be provided in that language.
(c) (1) When making any written representation during the negotiation to purchase or lease a specific vehicle about a monthly payment for any vehicle, the dealer shall disclose at least once, clearly and conspicuously and in writing, the total amount the consumer will pay to purchase or lease the vehicle at that monthly payment after making all payments as scheduled.
(2) If the total amount disclosed assumes the consumer will provide consideration, including in the form of a cash downpayment or trade-in valuation, the dealer shall disclose the amount of consideration to be provided by the consumer. This disclosure shall be in writing and shall be clear and conspicuous. If the transaction is negotiated primarily in a language identified by subdivision (b) of Section 1632, the disclosure required by this paragraph shall also be provided in that language.
(d) If the dealer makes any written comparison between payment options during the negotiation to purchase or lease a specific vehicle that includes discussion of lower monthly payments, the dealer shall disclose that lower monthly payments often increase the total amount the consumer will pay to purchase or lease the vehicle. Use of an internet-based tool that allows consumers to adjust financing parameters shall not constitute a violation of this section.
(e) The disclosures required by subdivisions (b), (c), and (d) may be incorporated into a document that includes the written disclosures required by Section 2982.2.
(f) Subdivision (a) shall not be construed to modify vehicle advertising requirements in Section 11713.1 or Section 11713.16 of the Vehicle Code. This includes, but is not limited to, the advertisement or communication of rebates and incentives that are disclosed separately from a vehicle’s total price.
(g) This section shall not apply to a used vehicle sold at an auction.
It is a violation of this title for any dealer, in connection with the sale or financing of vehicles, to charge for any of the following.
(a) A dealer may not charge for an add-on product or service if the vehicle purchaser or lessee would not benefit from the add-on product or service, including, as applicable, any of the following:
(1) Nitrogen-filled tire-related products or services that contain less than 95-percent nitrogen purity.
(2) Products or services that do not provide coverage for the vehicle, the consumer, or the transaction.
(3) A GAP agreement that is not in compliance with Section 2982, 2982.2, or 2982.12.
(4) A service contract if the service contract is void due to preexisting conditions, including prior damage from a crash or flood or preexisting mechanical conditions.
(5) Oil changes for electric vehicles.
(6) Catalytic converter markings for a vehicle that does not have a catalytic converter.
(7) Surface protection product that renders the manufacturer’s warranty for the paint job void.
(b) A dealer shall pay the person or entity who is supposed to provide the benefit of the add-on within 10 days of the date when the car buyer or lessee signs the purchase or lease, unless the dealer has an agreement with the person or entity that provides for payment at a later date and the buyer’s or lessee’s coverage is not impacted by the later payment.
(c) This section does not prohibit a dealer from charging for an add-on product or service, such as a service contract, if the add-on product or service is selected by, and would benefit, the vehicle purchaser or lessee, even if the vehicle purchaser or lessee ultimately does not choose to use the add-on product or service, and even if the vehicle purchaser or lessee does not use the add-on product or service because a coverage event does not occur.
(a) (1) (A) A dealer shall not sell or lease a used vehicle at retail at a price equal to or less than fifty thousand dollars ($50,000) without providing the buyer or lessee with a three-day right to cancel the purchase or lease.
(B) The right to cancel does not apply if the used vehicle has been driven more than 400 miles between the execution of the sale or lease agreement and the date on which the buyer or lessee attempts to exercise the right.
(2) (A) A dealer may charge a buyer or lessee who exercises the right to cancel a restocking fee. Except as provided in subparagraph (B), the dealer may collect the restocking fee on the date the buyer or lessee exercises the right to cancel.
(B) (i) If the buyer or lessee is entitled to any refund, the restocking fee shall be deducted from the refund.
(ii) If the refund does not cover the full amount of the restocking fee, the balance is due at the time the buyer or lessee exercises the right to cancel.
(3) (A) If the right to cancel is exercised, the dealer shall return the buyer’s or lessee’s trade-in vehicle and all keys the buyer or lessee provided, if any, unless the dealer has sold or otherwise initiated the process to transfer the title of the trade-in vehicle, in which case the refund for the trade-in vehicle is the greater of the following:
(i) The agreed-upon value of the trade-in vehicle in the sales or lease agreement.
(ii) The amount for which the dealer sold the trade-in vehicle.
(iii) The fair market value of the trade-in vehicle.
(B) The dealer may deduct from the amount required by subparagraph (A) the amount necessary to satisfy outstanding indebtedness secured by the trade-in vehicle. The dealer shall provide the buyer or lessee a receipt documenting the cancellation that includes an itemized breakdown of the basis for each deduction. The receipt shall include the date and time when the buyer or lessee exercised the right to cancel.
(C) For the purposes of clause (iii) of subparagraph (A), the dealer shall have a rebuttable presumption of establishing the fair market value by either of the two valuation methods:
(i) The valuation equals the amount identified in a written offer to purchase the trade-in vehicle received by the buyer or lessee, and honored by the dealer, and that offer is valid for at least seven days.
(ii) The valuation equals the vehicle’s trade-in valuation when the right to cancel was exercised, as identified in a nationally recognized pricing guide selected by the dealer, and considering the vehicle’s condition at the time the vehicle was traded in. For the purposes of this clause, “nationally recognized pricing guide” has the same meaning as paragraph (2) of subdivision (c) of Section 11950 of the Vehicle Code.
(b) Notwithstanding Section 2981.9 of the Civil Code, a dealer shall provide the buyer or lessee of a used vehicle subject to the right to cancel a copy of a disclosure titled “3-Day Right to Cancel Used Car Purchase or Lease” on a separate document. If the transaction is negotiated primarily in a language identified by subdivision (b) of Section 1632, the disclosure required by this subdivision shall also be provided in that language. The disclosure shall clearly and conspicuously contain all of the following:
(1) The name of the selling or leasing dealer and the buyer or lessee.
(2) A description and the vehicle identification number of the vehicle purchased.
(3) A statement specifying the time within which the buyer or lessee must exercise the right to cancel the sale or lease and return the vehicle to the dealer.
(4) A statement that although the dealer cannot charge the buyer or lessee for the right to cancel the purchase or lease, the dealer may charge the buyer or lessee a restocking fee. The statement shall describe how both components of the restocking fee are calculated.
(5) A statement that the buyer or lessee cannot exercise the right to cancel if the vehicle has been driven more than 400 miles.
(6) A statement that the right to cancel applies only if all of the following are personally delivered to the selling or leasing dealer during business hours by the buyer or lessee at the time the right to cancel is exercised:
(A) Restocking fees, except to the extent they are deducted from any refund as required by this section.
(B) The vehicle, meeting both of the following:
(i) Free of all liens and encumbrances, other than any lien or encumbrance created by or incidental to the sales or lease transaction.
(ii) In the same condition as when it was delivered by the dealer to the buyer or lessee, except reasonable wear and tear and any defect or mechanical problem that manifests or becomes evident after delivery that was not caused by the buyer or lessee. The dealer shall maintain documentation describing any damage beyond reasonable wear and tear.
(C) Any other cash or items received by the buyer or lessee in connection with the sale or lease of the vehicle.
(7) A statement that the dealer may require the buyer or lessee to execute documents reasonably necessary to effectuate the cancellation and refund and as reasonably required to comply with applicable law.
(8) (A) A statement that if the dealer has sold or otherwise initiated the process to transfer title of the buyer’s or lessee’s trade-in vehicle, the dealer shall pay the buyer or lessee the greater of the following:
(i) The agreed-upon value of the trade-in vehicle in the sales or lease agreement.
(ii) The amount for which the dealer sold the trade-in vehicle.
(iii) The fair market value of the trade-in vehicle.
(B) A statement that the amount of the refund may be reduced as necessary to satisfy outstanding indebtedness secured by the trade-in vehicle.
(9) A statement that if the dealer represents to the buyer or lessee that it sold the trade-in vehicle, it must provide the buyer or lessee a copy of the document showing the sale of the trade-in vehicle. The dealer shall redact the personal information of the person or entity to whom the trade-in vehicle was sold.
(c) It is a violation of this title for any dealer, in connection with a buyer or lessee exercising the right to cancel, to do any of the following:
(1) Anything to impede a buyer or lessee from exercising the right to cancel the purchase or lease of a vehicle as provided in this title.
(2) Overcharge the buyer or lessee for the restocking fee.
(3) Withhold the buyer’s or lessee’s downpayment or trade-in vehicle after the right to cancel has been exercised.
(4) Fail to timely refund the buyer’s or lessee’s downpayment after the right to cancel has been exercised.
(5) Fail to refund the amount owed for the buyer’s or lessee’s trade-in vehicle if the trade-in vehicle has been sold.
(6) Fail to provide the buyer or lessee the receipt or contract for the sale of the buyer’s or lessee’s trade-in vehicle.
(7) Claim damage to the vehicle in excess of reasonable wear and tear without reasonable basis.
(8) Claim the person authorized to return the buyer’s or lessee’s downpayment or trade-in vehicle is not available.
(d) (1) No later than 48 hours after the buyer or lessee exercises the right to cancel pursuant to this section, the dealer shall cancel the contract and provide the buyer or lessee with a full refund, minus any deduction allowed by this section. The dealer is not responsible for any delays outside the control of the dealer, including delays attributable to the processing of a refund by a bank, credit card company, or other financial institution.
(2) Notwithstanding paragraph (1), in the event the buyer or lessee made a payment through a method that does not result in an immediate verified transfer of funds to the dealer, such as a check, the dealer may delay providing the refund until two business days after the buyer or lessee’s payment is verified. The dealer shall provide the buyer or lessee with documentation showing when the verification occurred.
(e) The dealer will clearly and conspicuously disclose on the first page of the purchase or lease agreement the following:
“CALIFORNIA DOES NOT HAVE A COOLING-OFF PERIOD FOR NEW VEHICLES. HOWEVER, IF YOU PURCHASED
OR LEASED A USED VEHICLE FOR $50,000 OR LESS, YOU HAVE 3 DAYS TO CANCEL THIS CONTRACT FOR ANY REASON. ADDITIONAL RESTRICTIONS MAY APPLY, INCLUDING A RESTOCKING FEE.
You have up to 3 days to return the vehicle to the dealer and cancel this contract and obtain a refund. Please review the disclosure, which the dealer is required by law to provide, for the details about this right and how to exercise it.”
(f) This section does not affect the ability of a buyer to rescind the contract or revoke acceptance under any other law.
(g) This section does not apply to a used vehicle with a purchase price greater than fifty thousand dollars ($50,000).
(h) This section does not apply to the sale of a leased vehicle to the lessee if the lessee is in possession of the vehicle prior to the time of the sale.
(i) This section does not apply to a used vehicle sold at an auction, provided the used vehicle is in compliance with the requirements of Division 12 (commencing with Section 24000) of the Vehicle Code.
(j) This section shall not be construed to limit the ability of a dealer to offer a right to cancel that provides greater consumer protections than those outlined in this section, including a right to cancel for additional vehicles, a longer return period, or reduced restocking fees. In such circumstances, the dealer may elect to make corresponding changes that describe these greater consumer protections in any consumer notice required by this section or Section 11709.2 of the Vehicle Code.
(a) A dealer subject to this title shall create and retain, for a period of two years from the date the record is created, all records necessary to demonstrate compliance with this title, including the following records:
(1) Records demonstrating that communications and advertisements of a vehicle’s total price meet the requirements of subdivision (a) of Section 1784.41. For purposes of this paragraph, “advertisement” includes internet-based listings that display a vehicle’s total price, features, or financing terms disseminated by the dealer. This paragraph shall not require retention of records generated solely by interactive tools that allow consumers to adjust variables such as downpayment, credit tier, interest rate, or loan term to receive personalized financing estimates, provided the tools do not alter or misrepresent the vehicle’s total price as advertised.
(2) Copies of all purchase orders, financing and lease documents with the dealer signed by the consumer, whether or not final approval or assignment of the contract is received from a financing or lease transaction, and all written communications relating to sales, financing, or leasing between the dealer and any car buyer or lessee who signs a purchase order or financing or lease contract with the dealer.
(3) Records demonstrating that add-ons in a consumer’s contract meet the requirements of Section 1784.42, including copies of all service contracts, GAP agreements, proof of timely payment for add-ons, and calculations of loan-to-value ratios in contracts including GAP agreements.
(4) Copies of all cancellation requests, proof of refunds of downpayments or other consideration provided in the purchase of a vehicle, and proof of return of trade-in vehicles.
(5) Copies of all written complaints sent by car buyers or lessees to the dealer relating to sales, financing, leasing, or cancellation requests under Section 1784.43, written inquiries related to add-ons, and written inquiries and responses about vehicles referenced in Section 1784.41. For the purposes of this paragraph, “complaints” does not include responses to customer surveys or reviews, or testimonials posted on the internet.
(b) A dealer subject to this part may keep the records required by subdivision (a) in any legible form, and in the same manner, format, or place as they already keep records in the ordinary course of business. Failure to keep all records required under subdivision (a) is a violation of this title.
(c) This section does not limit the requirements imposed by Section 2984.5.
SEC. 2.
Section 2982 of the Civil Code is amended to read:
2982.
A conditional sale contract subject to this chapter shall contain the disclosures required by Regulation Z, whether or not Regulation Z applies to the transaction. In addition, to the extent applicable, the contract shall contain the other disclosures and notices required by, and shall satisfy the requirements and limitations of, this section. The disclosures required by subdivision (a) may be itemized or subtotaled to a greater extent than as required by that subdivision and shall be made together and in the sequence set forth in that subdivision. All other disclosures and notices may appear in the contract in any location or sequence and may be combined or interspersed with other provisions of the contract.
(a) The contract shall contain the following disclosures, as applicable, which shall be labeled “itemization of the amount financed”:
(1) (A) The cash price, exclusive of document processing charges, charges to electronically register or transfer the vehicle, taxes imposed on the sale, pollution control certification fees, prior credit or lease balance on property being traded in, the amount charged for a service contract, the amount charged for a theft deterrent system, the amount charged for a surface protection product, the amount charged for an optional debt cancellation agreement or guaranteed asset protection waiver, and the amount charged for a contract cancellation option agreement.
(B) The charge to be retained by the seller for document processing authorized pursuant to Section 4456.5 of the Vehicle Code.
(C) The fee charged by the seller for certifying that the motor vehicle complies with applicable pollution control requirements.
(D) A charge for a theft deterrent device.
(E) A charge for a surface protection product.
(F) The total amount charged by the seller for an electric vehicle charging station, which may include only the charges for the electric vehicle charging station device, any materials and wiring, and any installation services. The total amount shall be labeled “EV Charging Station.”
(G) Taxes imposed on the sale.
(H) The charge to electronically register or transfer the vehicle authorized pursuant to Section 4456.5 of the Vehicle Code.
(I) The amount charged for a service contract.
(J) The prior credit or lease balance remaining on property being traded in, as required by paragraph (6). The disclosure required by this subparagraph shall be labeled “prior credit or lease balance (see downpayment and trade-in calculation).”
(K) Any charge for an optional debt cancellation agreement or guaranteed asset protection waiver.
(L) Any charge for a used vehicle contract cancellation option agreement.
(M) The total cash price, which is the sum of subparagraphs (A) to (L), inclusive.
(N) The disclosures described in subparagraphs (D), (E), and (L) are not required on contracts involving the sale of a motorcycle, as defined in Section 400 of the Vehicle Code, or on contracts involving the sale of an off-highway motor vehicle that is subject to identification under Section 38010 of the Vehicle Code, and the amounts of those charges, if any, are not required to be reflected in the total price under subparagraph (M).
(2) Amounts paid to public officials for the following:
(A) Vehicle license fees.
(B) Registration, transfer, and titling fees.
(C) California tire fees imposed pursuant to Section 42885 of the Public Resources Code.
(3) The aggregate amount of premiums agreed, upon execution of the contract, to be paid for policies of insurance included in the contract, excluding the amount of any insurance premium included in the finance charge.
(4) The amount of the state fee for issuance of a certificate of compliance, noncompliance, exemption, or waiver pursuant to any applicable pollution control statute.
(5) A subtotal representing the sum of the amounts described in paragraphs (1) to (4), inclusive.
(6) The amount of the buyer’s downpayment itemized to show the following:
(A) The agreed value of the property being traded in.
(B) The prior credit or lease balance, if any, owing on the property being traded in.
(C) The net agreed value of the property being traded in, which is the difference between the amounts disclosed in subparagraphs (A) and (B). If the prior credit or lease balance of the property being traded in exceeds the agreed value of the property, a negative number shall be stated.
(D) The amount of any portion of the downpayment to be deferred until not later than the due date of the second regularly scheduled installment under the contract and that is not subject to a finance charge.
(E) The amount of any manufacturer’s rebate applied or to be applied to the downpayment.
(F) The remaining amount paid or to be paid by the buyer as a downpayment.
(G) The total downpayment. If the sum of subparagraphs (C) to (F), inclusive, is zero or more, that sum shall be stated as the total downpayment, and no amount shall be stated as the prior credit or lease balance under subparagraph (I) of paragraph (1). If the sum of subparagraphs (C) to (F), inclusive, is less than zero, then that sum, expressed as a positive number, shall be stated as the prior credit or lease balance under subparagraph (I) of paragraph (1), and zero shall be stated as the total downpayment. The disclosure required by this subparagraph shall be labeled “total downpayment” and shall contain a descriptor indicating that if the total downpayment is a negative number, a zero shall be disclosed as the total downpayment and a reference made that the remainder shall be included in the disclosure required pursuant to subparagraph (I) of paragraph (1).
(7) The amount of any administrative finance charge, labeled “prepaid finance charge.”
(8) The difference between the amount described in paragraph (5) and the sum of the amounts described in paragraphs (6) and (7), labeled “amount financed.”
(b) No particular terminology is required to disclose the items set forth in subdivision (a) except as expressly provided in that subdivision.
(c) If payment of all or a portion of the downpayment is to be deferred, the deferred payment shall be reflected in the payment schedule disclosed pursuant to Regulation Z.
(d) If the downpayment includes property being traded in, the contract shall contain a brief description of that property.
(e) The contract shall contain the names and addresses of all persons to whom the notice required pursuant to Section 2983.2 and permitted pursuant to Sections 2983.5 and 2984 is to be sent.
(f) (1) If the contract includes a finance charge determined on the precomputed basis, the contract shall identify the method of computing the unearned portion of the finance charge in the event of prepayment in full of the buyer’s obligation and contain a statement of the amount or method of computation of any charge that may be deducted from the amount of any unearned finance charge in computing the amount that will be credited to the obligation or refunded to the buyer. The method of computing the unearned portion of the finance charge shall be sufficiently identified with a reference to the actuarial method if the computation will be under that method. The method of computing the unearned portion of the finance charge shall be sufficiently identified with a reference to the Rule of 78’s, the sum of the digits, or the sum of the periodic time balances method in all other cases, and those references shall be deemed to be equivalent for disclosure purposes.
(2) If the contract includes a finance charge that is determined on the simple-interest basis but provides for a minimum finance charge in the event of prepayment in full, the contract shall contain a statement of that fact and the amount of the minimum finance charge or its method of calculation.
(g) (1) If the contract includes a finance charge that is determined on the precomputed basis and provides that the unearned portion of the finance charge to be refunded upon full prepayment of the contract is to be determined by a method other than actuarial, the contract shall contain a notice, in at least 10-point boldface type if the contract is printed, reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time and obtain a partial refund of the finance charge if it is $1 or more. Because of the way the amount of this refund will be figured, the time when you prepay could increase the ultimate cost of credit under this agreement. (4) If you default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness evidenced by this agreement.”
(2) If the contract includes a finance charge that is determined on the precomputed basis and provides for the actuarial method for computing the unearned portion of the finance charge upon prepayment in full, the contract shall contain a notice, in at least 10-point boldface type if the contract is printed, reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time and obtain a partial refund of the finance charge if it is $1 or more. (4) If you default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness evidenced by this agreement.”
(3) If the contract includes a finance charge that is determined on the simple-interest basis, the contract shall contain a notice, in at least 10-point boldface type if the contract is printed, reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time. (4) If you default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness evidenced by this agreement.”
(h) The contract shall contain a notice in at least 8-point boldface type, acknowledged by the buyer, that reads as follows:
“If you have a complaint concerning this sale, you should try to resolve it with the seller.
Complaints concerning unfair or deceptive practices or methods by the seller may be referred to the city attorney, the district attorney, or an investigator for the Department of Motor Vehicles, or any combination thereof.
After this contract is signed, the seller may not change the financing or payment terms unless you agree in writing to the change. You do not have to agree to any change, and it is an unfair or deceptive practice for the seller to make a unilateral change.
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(i) (1) The contract shall contain an itemization of any insurance included as part of the amount financed disclosed pursuant to paragraph (3) of subdivision (a) and of any insurance included as part of the finance charge. The itemization shall identify the type of insurance coverage and the premium charged therefor, and, if the insurance expires before the date of the last scheduled installment included in the repayment schedule, the term of the insurance shall be stated.
(2) If any charge for insurance, other than for credit life or disability, is included in the contract balance and disbursement of any part thereof is to be made more than one year after the date of the conditional sale contract, any finance charge on the amount to be disbursed after one year shall be computed from the month the disbursement is to be made to the due date of the last installment under the conditional sale contract.
(j) (1) Except for contracts in which the finance charge or a portion of the finance charge is determined by the simple-interest basis and the amount financed disclosed pursuant to paragraph (8) of subdivision (a) is more than two thousand five hundred dollars ($2,500), the dollar amount of the disclosed finance charge may not exceed the greater of:
(A) (i) One and one-half percent on so much of the unpaid balance as does not exceed two hundred twenty-five dollars ($225), 1⅙ percent on so much of the unpaid balance in excess of two hundred twenty-five dollars ($225) as does not exceed nine hundred dollars ($900) and⅚ of 1 percent on so much of the unpaid balance in excess of nine hundred dollars ($900) as does not exceed two thousand five hundred dollars ($2,500).
(ii) One percent of the entire unpaid balance; multiplied in either case by the number of months (computed on the basis of a full month for any fractional month period in excess of 15 days) elapsing between the date of the contract and the due date of the last installment.
(B) If the finance charge is determined by the precomputed basis, twenty-five dollars ($25).
(C) If the finance charge or a portion thereof is determined by the simple-interest basis:
(i) Twenty-five dollars ($25) if the unpaid balance does not exceed one thousand dollars ($1,000).
(ii) Fifty dollars ($50) if the unpaid balance exceeds one thousand dollars ($1,000) but does not exceed two thousand dollars ($2,000).
(iii) Seventy-five dollars ($75) if the unpaid balance exceeds two thousand dollars ($2,000).
(2) The holder of the contract shall not charge, collect, or receive a finance charge that exceeds the disclosed finance charge, except to the extent (A) caused by the holder’s receipt of one or more payments under a contract that provides for determination of the finance charge or a portion thereof on the 365-day basis at a time or times other than as originally scheduled whether or not the parties enter into an agreement pursuant to Section 2982.3, (B) permitted by paragraph (2), (3), or (4) of subdivision (c) of Section 226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c) of Section 2982.8.
(3) If the finance charge or a portion thereof is determined by the simple-interest basis and the amount of the unpaid balance exceeds five thousand dollars ($5,000), the holder of the contract may, in lieu of its right to a minimum finance charge under subparagraph (C) of paragraph (1), charge, receive, or collect on the date of the contract an administrative finance charge not to exceed seventy-five dollars ($75), provided that the sum of the administrative finance charge and the portion of the finance charge determined by the simple-interest basis shall not exceed the maximum total finance charge permitted by subparagraph (A) of paragraph (1). Any administrative finance charge that is charged, received, or collected by a holder shall be deemed a finance charge earned on the date of the contract.
(4) If a contract provides for unequal or irregular payments, or payments on other than a monthly basis, the maximum finance charge shall be at the effective rate provided for in paragraph (1), having due regard for the schedule of installments.
(k) The contract may provide that for each installment in default for a period of not less than 10 days the buyer shall pay a delinquency charge in an amount not to exceed in the aggregate 5 percent of the delinquent installment, which amount may be collected only once on any installment regardless of the period during which it remains in default. Payments timely received by the seller under an extension or deferral agreement may not be subject to a delinquency charge unless the charge is permitted by Section 2982.3. The contract may provide for reasonable collection costs and fees in the event of delinquency.
(l) Notwithstanding any provision of a contract to the contrary, the buyer may pay at any time before maturity the entire indebtedness evidenced by the contract without penalty. In the event of prepayment in full:
(1) If the finance charge was determined on the precomputed basis, the amount required to prepay the contract shall be the outstanding contract balance as of that date, provided, however, that the buyer shall be entitled to a refund credit in the amount of the unearned portion of the finance charge, except as provided in paragraphs (3) and (4). The amount of the unearned portion of the finance charge shall be at least as great a proportion of the finance charge, including any additional finance charge imposed pursuant to Section 2982.8 or other additional charge imposed because the contract has been extended, deferred, or refinanced, as the sum of the periodic monthly time balances payable more than 15 days after the date of prepayment bears to the sum of all the periodic monthly time balances under the schedule of installments in the contract or, if the contract has been extended, deferred, or refinanced, as so extended, deferred, or refinanced. If the amount of the refund credit is less than one dollar ($1), no refund credit need be made by the holder. Any refund credit may be made in cash or credited to the outstanding obligations of the buyer under the contract.
(2) If the finance charge or a portion of the finance charge was determined on the simple-interest basis, the amount required to prepay the contract shall be the outstanding contract balance as of that date, including any earned finance charges that are unpaid as of that date and, if applicable, the amount provided in paragraph (3), and provided further that in cases where a finance charge is determined on the 360-day basis, the payments received under the contract shall be assumed to have been received on their respective due dates regardless of the actual dates on which the payments were received.
(3) If the minimum finance charge provided by subparagraph (B) or subparagraph (C) of paragraph (1) of subdivision (j), if either is applicable, is greater than the earned finance charge as of the date of prepayment, the holder shall be additionally entitled to the difference.
(4) This subdivision shall not impair the right of the seller or the seller’s assignee to receive delinquency charges on delinquent installments and reasonable costs and fees as provided in subdivision (k) or extension or deferral agreement charges as provided in Section 2982.3.
(5) Notwithstanding any provision of a contract to the contrary, if the indebtedness created by any contract is satisfied prior to its maturity through surrender of the motor vehicle, repossession of the motor vehicle, redemption of the motor vehicle after repossession, or any judgment, the outstanding obligation of the buyer shall be determined as provided in paragraph (1) or (2), except that the buyer’s outstanding obligation shall be computed by the holder as of the date the holder recovers the value of the motor vehicle through disposition thereof or judgment is entered or, if the holder elects to keep the motor vehicle in satisfaction of the buyer’s indebtedness, as of the date the holder takes possession of the motor vehicle.
(m) Notwithstanding any other provision of this chapter to the contrary, any information required to be disclosed in a conditional sale contract under this chapter may be disclosed in any manner, method, or terminology required or permitted under Regulation Z, as in effect at the time that disclosure is made, except that permitted by paragraph (2) of subdivision (c) of Section 226.18 of Regulation Z, if all of the requirements and limitations set forth in subdivision (a) are satisfied. This chapter does not prohibit the disclosure in that contract of additional information required or permitted under Regulation Z, as in effect at the time that disclosure is made.
(n) If the seller imposes a charge for document processing or to electronically register or transfer the vehicle, the contract shall contain a disclosure that the charge is not a governmental fee.
(o) A seller shall not impose an application fee for a transaction governed by this chapter.
(p) The seller or holder may charge and collect a fee not to exceed fifteen dollars ($15) for the return by a depository institution of a dishonored check, negotiated order of withdrawal, or share draft issued in connection with the contract if the contract so provides or if the contract contains a generalized statement that the buyer may be liable for collection costs incurred in connection with the contract.
(q) The contract shall disclose on its face, by printing the word “new” or “used” within a box outlined in red, that is not smaller than one-half inch high and one-half inch wide, whether the vehicle is sold as a new vehicle, as defined in Section 430 of the Vehicle Code, or as a used vehicle, as defined in Section 665 of the Vehicle Code.
(r) The contract shall contain a notice with a heading in at least 12-point bold type and the text in at least 10-point bold type, circumscribed by a line, immediately above the contract signature line, that reads as follows:
THERE IS NO COOLING-OFF PERIOD UNLESS YOU |
(s) This section shall remain in effect only until October 1, 2026, and as of that date is repealed.
SEC. 3.
Section 2982 is added to the Civil Code, to read:
2982.
A conditional sale contract subject to this chapter shall contain the disclosures required by Regulation Z, whether or not Regulation Z applies to the transaction. In addition, to the extent applicable, the contract shall contain the other disclosures and notices required by, and shall satisfy the requirements and limitations of, this section. The disclosures required by subdivision (a) may be itemized or subtotaled to a greater extent than as required by that subdivision and shall be made together and in the sequence set forth in that subdivision. All other disclosures and notices may appear in the contract in any location or sequence and may be combined or interspersed with other provisions of the contract.
(a) The contract shall contain the following disclosures, as applicable, which shall be labeled “itemization of the amount financed”:
(1) (A) The cash price, exclusive of document processing charges, charges to electronically register or transfer the vehicle, taxes imposed on the sale, pollution control certification fees, prior credit or lease balance on property being traded in, the amount charged for a service contract, the amount charged for a theft deterrent system, the amount charged for a surface protection product, the amount charged for an optional debt cancellation agreement or guaranteed asset protection waiver, and the amount charged for a contract cancellation option agreement.
(B) The charge to be retained by the seller for document processing authorized pursuant to Section 4456.5 of the Vehicle Code.
(C) The fee charged by the seller for certifying that the motor vehicle complies with applicable pollution control requirements.
(D) A charge for a theft deterrent device.
(E) A charge for a surface protection product.
(F) The total amount charged by the seller for an electric vehicle charging station, which may include only the charges for the electric vehicle charging station device, any materials and wiring, and any installation services. The total amount shall be labeled “EV Charging Station.”
(G) Taxes imposed on the sale.
(H) The charge to electronically register or transfer the vehicle authorized pursuant to Section 4456.5 of the Vehicle Code.
(I) The amount charged for a service contract.
(J) The prior credit or lease balance remaining on property being traded in, as required by paragraph (6). The disclosure required by this subparagraph shall be labeled “prior credit or lease balance (see downpayment and trade-in calculation).”
(K) Any charge for an optional debt cancellation agreement or guaranteed asset protection waiver.
(L) The total cash price, which is the sum of subparagraphs (A) to (K), inclusive.
(M) The disclosures described in subparagraphs (D) and (E) are not required on contracts involving the sale of a motorcycle, as defined in Section 400 of the Vehicle Code, or on contracts involving the sale of an off-highway motor vehicle that is subject to identification under Section 38010 of the Vehicle Code, and the amounts of those charges, if any, are not required to be reflected in the total price under subparagraph (L).
(2) Amounts paid to public officials for the following:
(A) Vehicle license fees.
(B) Registration, transfer, and titling fees.
(C) California tire fees imposed pursuant to Section 42885 of the Public Resources Code.
(3) The aggregate amount of premiums agreed, upon execution of the contract, to be paid for policies of insurance included in the contract, excluding the amount of any insurance premium included in the finance charge.
(4) The amount of the state fee for issuance of a certificate of compliance, noncompliance, exemption, or waiver pursuant to any applicable pollution control statute.
(5) A subtotal representing the sum of the amounts described in paragraphs (1) to (4), inclusive.
(6) The amount of the buyer’s downpayment itemized to show the following:
(A) The agreed value of the property being traded in.
(B) The prior credit or lease balance, if any, owing on the property being traded in.
(C) The net agreed value of the property being traded in, which is the difference between the amounts disclosed in subparagraphs (A) and (B). If the prior credit or lease balance of the property being traded in exceeds the agreed value of the property, a negative number shall be stated.
(D) The amount of any portion of the downpayment to be deferred until not later than the due date of the second regularly scheduled installment under the contract and that is not subject to a finance charge.
(E) The amount of any manufacturer’s rebate applied or to be applied to the downpayment.
(F) The remaining amount paid or to be paid by the buyer as a downpayment.
(G) The total downpayment. If the sum of subparagraphs (C) to (F), inclusive, is zero or more, that sum shall be stated as the total downpayment, and no amount shall be stated as the prior credit or lease balance under subparagraph (I) of paragraph (1). If the sum of subparagraphs (C) to (F), inclusive, is less than zero, then that sum, expressed as a positive number, shall be stated as the prior credit or lease balance under subparagraph (I) of paragraph (1), and zero shall be stated as the total downpayment. The disclosure required by this subparagraph shall be labeled “total downpayment” and shall contain a descriptor indicating that if the total downpayment is a negative number, a zero shall be disclosed as the total downpayment and a reference made that the remainder shall be included in the disclosure required pursuant to subparagraph (I) of paragraph (1).
(7) The amount of any administrative finance charge, labeled “prepaid finance charge.”
(8) The difference between the amount described in paragraph (5) and the sum of the amounts described in paragraphs (6) and (7), labeled “amount financed.”
(b) No particular terminology is required to disclose the items set forth in subdivision (a) except as expressly provided in that subdivision.
(c) If payment of all or a portion of the downpayment is to be deferred, the deferred payment shall be reflected in the payment schedule disclosed pursuant to Regulation Z.
(d) If the downpayment includes property being traded in, the contract shall contain a brief description of that property.
(e) The contract shall contain the names and addresses of all persons to whom the notice required pursuant to Section 2983.2 and permitted pursuant to Sections 2983.5 and 2984 is to be sent.
(f) (1) If the contract includes a finance charge determined on the precomputed basis, the contract shall identify the method of computing the unearned portion of the finance charge in the event of prepayment in full of the buyer’s obligation and contain a statement of the amount or method of computation of any charge that may be deducted from the amount of any unearned finance charge in computing the amount that will be credited to the obligation or refunded to the buyer. The method of computing the unearned portion of the finance charge shall be sufficiently identified with a reference to the actuarial method if the computation will be under that method. The method of computing the unearned portion of the finance charge shall be sufficiently identified with a reference to the Rule of 78’s, the sum of the digits, or the sum of the periodic time balances method in all other cases, and those references shall be deemed to be equivalent for disclosure purposes.
(2) If the contract includes a finance charge that is determined on the simple-interest basis but provides for a minimum finance charge in the event of prepayment in full, the contract shall contain a statement of that fact and the amount of the minimum finance charge or its method of calculation.
(g) (1) If the contract includes a finance charge that is determined on the precomputed basis and provides that the unearned portion of the finance charge to be refunded upon full prepayment of the contract is to be determined by a method other than actuarial, the contract shall contain a notice, in at least 10-point boldface type if the contract is printed, reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time and obtain a partial refund of the finance charge if it is $1 or more. Because of the way the amount of this refund will be figured, the time when you prepay could increase the ultimate cost of credit under this agreement. (4) If you default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness evidenced by this agreement.”
(2) If the contract includes a finance charge that is determined on the precomputed basis and provides for the actuarial method for computing the unearned portion of the finance charge upon prepayment in full, the contract shall contain a notice, in at least 10-point boldface type if the contract is printed, reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time and obtain a partial refund of the finance charge if it is $1 or more. (4) If you default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness evidenced by this agreement.”
(3) If the contract includes a finance charge that is determined on the simple-interest basis, the contract shall contain a notice, in at least 10-point boldface type if the contract is printed, reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time. (4) If you default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness evidenced by this agreement.”
(h) The contract shall contain a notice in at least 8-point boldface type, acknowledged by the buyer, that reads as follows:
“If you have a complaint concerning this sale, you should try to resolve it with the seller.
Complaints concerning unfair or deceptive practices or methods by the seller may be referred to the city attorney, the district attorney, or an investigator for the Department of Motor Vehicles, or any combination thereof.
After this contract is signed, the seller may not change the financing or payment terms unless you agree in writing to the change. You do not have to agree to any change, and it is an unfair or deceptive practice for the seller to make a unilateral change.
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(i) (1) The contract shall contain an itemization of any insurance included as part of the amount financed disclosed pursuant to paragraph (3) of subdivision (a) and of any insurance included as part of the finance charge. The itemization shall identify the type of insurance coverage and the premium charged therefor, and, if the insurance expires before the date of the last scheduled installment included in the repayment schedule, the term of the insurance shall be stated.
(2) If any charge for insurance, other than for credit life or disability, is included in the contract balance and disbursement of any part thereof is to be made more than one year after the date of the conditional sale contract, any finance charge on the amount to be disbursed after one year shall be computed from the month the disbursement is to be made to the due date of the last installment under the conditional sale contract.
(j) (1) Except for contracts in which the finance charge or a portion of the finance charge is determined by the simple-interest basis and the amount financed disclosed pursuant to paragraph (8) of subdivision (a) is more than two thousand five hundred dollars ($2,500), the dollar amount of the disclosed finance charge may not exceed the greater of:
(A) (i) One and one-half percent on so much of the unpaid balance as does not exceed two hundred twenty-five dollars ($225), 1⅙ percent on so much of the unpaid balance in excess of two hundred twenty-five dollars ($225) as does not exceed nine hundred dollars ($900) and⅚ of 1 percent on so much of the unpaid balance in excess of nine hundred dollars ($900) as does not exceed two thousand five hundred dollars ($2,500).
(ii) One percent of the entire unpaid balance; multiplied in either case by the number of months (computed on the basis of a full month for any fractional month period in excess of 15 days) elapsing between the date of the contract and the due date of the last installment.
(B) If the finance charge is determined by the precomputed basis, twenty-five dollars ($25).
(C) If the finance charge or a portion thereof is determined by the simple-interest basis:
(i) Twenty-five dollars ($25) if the unpaid balance does not exceed one thousand dollars ($1,000).
(ii) Fifty dollars ($50) if the unpaid balance exceeds one thousand dollars ($1,000) but does not exceed two thousand dollars ($2,000).
(iii) Seventy-five dollars ($75) if the unpaid balance exceeds two thousand dollars ($2,000).
(2) The holder of the contract shall not charge, collect, or receive a finance charge that exceeds the disclosed finance charge, except to the extent (A) caused by the holder’s receipt of one or more payments under a contract that provides for determination of the finance charge or a portion thereof on the 365-day basis at a time or times other than as originally scheduled whether or not the parties enter into an agreement pursuant to Section 2982.3, (B) permitted by paragraph (2), (3), or (4) of subdivision (c) of Section 226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c) of Section 2982.8.
(3) If the finance charge or a portion thereof is determined by the simple-interest basis and the amount of the unpaid balance exceeds five thousand dollars ($5,000), the holder of the contract may, in lieu of its right to a minimum finance charge under subparagraph (C) of paragraph (1), charge, receive, or collect on the date of the contract an administrative finance charge not to exceed seventy-five dollars ($75), provided that the sum of the administrative finance charge and the portion of the finance charge determined by the simple-interest basis shall not exceed the maximum total finance charge permitted by subparagraph (A) of paragraph (1). Any administrative finance charge that is charged, received, or collected by a holder shall be deemed a finance charge earned on the date of the contract.
(4) If a contract provides for unequal or irregular payments, or payments on other than a monthly basis, the maximum finance charge shall be at the effective rate provided for in paragraph (1), having due regard for the schedule of installments.
(k) The contract may provide that for each installment in default for a period of not less than 10 days the buyer shall pay a delinquency charge in an amount not to exceed in the aggregate 5 percent of the delinquent installment, which amount may be collected only once on any installment regardless of the period during which it remains in default. Payments timely received by the seller under an extension or deferral agreement may not be subject to a delinquency charge unless the charge is permitted by Section 2982.3. The contract may provide for reasonable collection costs and fees in the event of delinquency.
(l) Notwithstanding any provision of a contract to the contrary, the buyer may pay at any time before maturity the entire indebtedness evidenced by the contract without penalty. In the event of prepayment in full:
(1) If the finance charge was determined on the precomputed basis, the amount required to prepay the contract shall be the outstanding contract balance as of that date, provided, however, that the buyer shall be entitled to a refund credit in the amount of the unearned portion of the finance charge, except as provided in paragraphs (3) and (4). The amount of the unearned portion of the finance charge shall be at least as great a proportion of the finance charge, including any additional finance charge imposed pursuant to Section 2982.8 or other additional charge imposed because the contract has been extended, deferred, or refinanced, as the sum of the periodic monthly time balances payable more than 15 days after the date of prepayment bears to the sum of all the periodic monthly time balances under the schedule of installments in the contract or, if the contract has been extended, deferred, or refinanced, as so extended, deferred, or refinanced. If the amount of the refund credit is less than one dollar ($1), no refund credit need be made by the holder. Any refund credit may be made in cash or credited to the outstanding obligations of the buyer under the contract.
(2) If the finance charge or a portion of the finance charge was determined on the simple-interest basis, the amount required to prepay the contract shall be the outstanding contract balance as of that date, including any earned finance charges that are unpaid as of that date and, if applicable, the amount provided in paragraph (3), and provided further that in cases where a finance charge is determined on the 360-day basis, the payments received under the contract shall be assumed to have been received on their respective due dates regardless of the actual dates on which the payments were received.
(3) If the minimum finance charge provided by subparagraph (B) or subparagraph (C) of paragraph (1) of subdivision (j), if either is applicable, is greater than the earned finance charge as of the date of prepayment, the holder shall be additionally entitled to the difference.
(4) This subdivision shall not impair the right of the seller or the seller’s assignee to receive delinquency charges on delinquent installments and reasonable costs and fees as provided in subdivision (k) or extension or deferral agreement charges as provided in Section 2982.3.
(5) Notwithstanding any provision of a contract to the contrary, if the indebtedness created by any contract is satisfied prior to its maturity through surrender of the motor vehicle, repossession of the motor vehicle, redemption of the motor vehicle after repossession, or any judgment, the outstanding obligation of the buyer shall be determined as provided in paragraph (1) or (2), except that the buyer’s outstanding obligation shall be computed by the holder as of the date the holder recovers the value of the motor vehicle through disposition thereof or judgment is entered or, if the holder elects to keep the motor vehicle in satisfaction of the buyer’s indebtedness, as of the date the holder takes possession of the motor vehicle.
(m) Notwithstanding any other provision of this chapter to the contrary, any information required to be disclosed in a conditional sale contract under this chapter may be disclosed in any manner, method, or terminology required or permitted under Regulation Z, as in effect at the time that disclosure is made, except that permitted by paragraph (2) of subdivision (c) of Section 226.18 of Regulation Z, if all of the requirements and limitations set forth in subdivision (a) are satisfied. This chapter does not prohibit the disclosure in that contract of additional information required or permitted under Regulation Z, as in effect at the time that disclosure is made.
(n) If the seller imposes a charge for document processing or to electronically register or transfer the vehicle, the contract shall contain a disclosure that the charge is not a governmental fee.
(o) A seller shall not impose an application fee for a transaction governed by this chapter.
(p) The seller or holder may charge and collect a fee not to exceed fifteen dollars ($15) for the return by a depository institution of a dishonored check, negotiated order of withdrawal, or share draft issued in connection with the contract if the contract so provides or if the contract contains a generalized statement that the buyer may be liable for collection costs incurred in connection with the contract.
(q) The contract shall disclose on its face, by printing the word “new” or “used” within a box outlined in red, that is not smaller than one-half inch high and one-half inch wide, whether the vehicle is sold as a new vehicle, as defined in Section 430 of the Vehicle Code, or as a used vehicle, as defined in Section 665 of the Vehicle Code.
(r) The contract shall contain the disclosure identified in subdivision (e) of Section 1784.43.
(s) This section shall become operative October 1, 2026.
SEC. 4.
Section 2985.8 of the Civil Code is amended to read:
2985.8.
(a) A lease contract shall be in writing, and the print portion of the contract shall be printed in at least 8-point type and shall contain in a single document all of the agreements of the lessor and lessee with respect to the obligations of each party.
(b) At the top of the lease contract, a title that contains the words “LEASE CONTRACT” or “LEASE AGREEMENT” shall appear in at least 12-point boldface type.
(c) A lease contract shall disclose all of the following:
(1) All of the information prescribed by Regulation M set forth in the manner required or permitted by Regulation M, whether or not Regulation M applies to the transaction.
(2) A separate statement labeled “Itemization of Gross Capitalized Cost” that shall appear immediately following or directly adjacent to the disclosures required to be segregated by Regulation M. The Itemization of Gross Capitalized Cost shall include all of the following and shall be circumscribed by a line:
(A) The agreed-upon value of the vehicle as equipped at the time of signing the lease.
(B) The agreed-upon value and a description of each accessory and item of optional equipment the lessor agrees to add to the vehicle after signing the lease.
(C) The premium for each policy of insurance.
(D) The amount charged for each service contract.
(E) Any charge for an optional debt cancellation agreement.
(F) Any outstanding prior credit or lease balance.
(G) An itemization by type and agreed-upon value of each good or service included in the gross capitalized cost other than those items included in the disclosures required in subparagraphs (A) to (F), inclusive.
(3) The vehicle identification number of the leased vehicle.
(4) A brief description of each vehicle or other property being traded in and the agreed-upon value of the vehicle or property if the amount due at the time of signing the lease or upon delivery is paid in whole or in part with a net trade-in allowance or the “Itemization of Gross Capitalized Cost” includes any portion of the outstanding prior credit or lease balance from the trade-in property.
(5) The charge, if any, to be retained by the lessor for document processing authorized pursuant to Section 4456.5 of the Vehicle Code, which may not be represented as a governmental fee.
(6) The charge, if any, to electronically register or transfer the vehicle authorized pursuant to Section 4456.5 of the Vehicle Code, which shall not be represented as a governmental fee.
(d) A lease contract shall contain, in at least 8-point boldface type, above the space provided for the lessee’s signature and circumscribed by a line, the following notice: “(1) Do not sign this lease before you read it or if it contains any blank spaces to be filled in; (2) You are entitled to a completely filled in copy of this lease; (3) Warning—Unless a charge is included in this lease for public liability or property damage insurance, payment for that coverage is not provided by this lease.”
(e) A lease contract shall contain, in at least 8-point boldface type, on the first page of the contract and circumscribed by a line, the following notice:
“THERE IS NO COOLING OFF PERIOD
California law does not provide for a “cooling off” or other cancellation period for vehicle leases. Therefore, you cannot later cancel this lease simply because you change your mind, decided the vehicle costs too much, or wish you had acquired a different vehicle. You may cancel this lease only with the agreement of the lessor or for legal cause, such as fraud.”
(f) A lease contract shall contain, in at least 8-point boldface type, the following notice: “You have the right to return the vehicle, and receive a refund of any payments made if the credit application is not approved, unless nonapproval results from an incomplete application or from incorrect information provided by you.”
(g) The lease contract shall be signed by the lessor and lessee, or their authorized representatives, and an exact copy of the fully executed lease contract shall be provided to the lessee at the time of signing.
(h) A motor vehicle shall not be delivered under a lease contract subject to this chapter until the lessor provides to the lessee a fully executed copy of the lease contract.
(i) The lessor shall not obtain the signature of the lessee to a contract when it contains blank spaces to be filled in after it has been signed.
(j) If the lease contract contains a provision that holds the lessee liable for the difference between (1) the adjusted capitalized cost disclosed in the lease contract reduced by the amounts described in subparagraph (A) of paragraph (5) of subdivision (b) of Section 2987 and (2) the settlement proceeds of the lessee’s required insurance and deductible in the event of theft or damage to the vehicle that results in a total loss, the lease contract shall contain the following notice in at least 8-point boldface type on the first page of the contract:
“GAP LIABILITY NOTICE
In the event of theft or damage to the vehicle that results in a total loss, there may be a GAP between the amount due upon early termination and the proceeds of your insurance settlement and deductible. THIS LEASE PROVIDES THAT YOU ARE LIABLE FOR THE GAP AMOUNT. Optional coverage for the GAP amount may be offered for an additional price.”
(k) This section shall remain in effect only until October 1, 2026, and as of that date is repealed.
SEC. 5.
Section 2985.8 is added to the Civil Code, to read:
2985.8.
(a) A lease contract shall be in writing, and the print portion of the contract shall be printed in at least 8-point type and shall contain in a single document all of the agreements of the lessor and lessee with respect to the obligations of each party.
(b) At the top of the lease contract, a title that contains the words “LEASE CONTRACT” or “LEASE AGREEMENT” shall appear in at least 12-point boldface type.
(c) A lease contract shall disclose all of the following:
(1) All of the information prescribed by Regulation M set forth in the manner required or permitted by Regulation M, whether or not Regulation M applies to the transaction.
(2) A separate statement labeled “Itemization of Gross Capitalized Cost” that shall appear immediately following or directly adjacent to the disclosures required to be segregated by Regulation M. The Itemization of Gross Capitalized Cost shall include all of the following and shall be circumscribed by a line:
(A) The agreed-upon value of the vehicle as equipped at the time of signing the lease.
(B) The agreed-upon value and a description of each accessory and item of optional equipment the lessor agrees to add to the vehicle after signing the lease.
(C) The premium for each policy of insurance.
(D) The amount charged for each service contract.
(E) Any charge for an optional debt cancellation agreement.
(F) Any outstanding prior credit or lease balance.
(G) An itemization by type and agreed-upon value of each good or service included in the gross capitalized cost other than those items included in the disclosures required in subparagraphs (A) to (F), inclusive.
(3) The vehicle identification number of the leased vehicle.
(4) A brief description of each vehicle or other property being traded in and the agreed-upon value of the vehicle or property if the amount due at the time of signing the lease or upon delivery is paid in whole or in part with a net trade-in allowance or the “Itemization of Gross Capitalized Cost” includes any portion of the outstanding prior credit or lease balance from the trade-in property.
(5) The charge, if any, to be retained by the lessor for document processing authorized pursuant to Section 4456.5 of the Vehicle Code, which may not be represented as a governmental fee.
(6) The charge, if any, to electronically register or transfer the vehicle authorized pursuant to Section 4456.5 of the Vehicle Code, which shall not be represented as a governmental fee.
(d) A lease contract shall contain, in at least 8-point boldface type, above the space provided for the lessee’s signature and circumscribed by a line, the following notice: “(1) Do not sign this lease before you read it or if it contains any blank spaces to be filled in; (2) You are entitled to a completely filled in copy of this lease; (3) Warning—Unless a charge is included in this lease for public liability or property damage insurance, payment for that coverage is not provided by this lease.”
(e) A lease contract shall contain the disclosure identified in subdivision (e) of Section 1784.43.
(f) A lease contract shall contain, in at least 8-point boldface type, the following notice: “You have the right to return the vehicle, and receive a refund of any payments made if the credit application is not approved, unless nonapproval results from an incomplete application or from incorrect information provided by you.”
(g) The lease contract shall be signed by the lessor and lessee, or their authorized representatives, and an exact copy of the fully executed lease contract shall be provided to the lessee at the time of signing.
(h) A motor vehicle shall not be delivered under a lease contract subject to this chapter until the lessor provides to the lessee a fully executed copy of the lease contract.
(i) The lessor shall not obtain the signature of the lessee to a contract when it contains blank spaces to be filled in after it has been signed.
(j) If the lease contract contains a provision that holds the lessee liable for the difference between (1) the adjusted capitalized cost disclosed in the lease contract reduced by the amounts described in subparagraph (A) of paragraph (5) of subdivision (b) of Section 2987 and (2) the settlement proceeds of the lessee’s required insurance and deductible in the event of theft or damage to the vehicle that results in a total loss, the lease contract shall contain the following notice in at least 8-point boldface type on the first page of the contract:
“GAP LIABILITY NOTICE
In the event of theft or damage to the vehicle that results in a total loss, there may be a GAP between the amount due upon early termination and the proceeds of your insurance settlement and deductible. THIS LEASE PROVIDES THAT YOU ARE LIABLE FOR THE GAP AMOUNT. Optional coverage for the GAP amount may be offered for an additional price.”
(k) This section shall become operative on October 1, 2026.
SEC. 6.
Section 6012.3 of the Revenue and Taxation Code is amended to read:
6012.3.
(a) For purposes of this part, “gross receipts” and “sales price” do not include that portion of the sales price returned to the purchaser of a used motor vehicle or the purchase price for the purchase of a contract cancellation option pursuant to Section 11713.21 of the Vehicle Code.
(b) This section shall remain in effect only until October 1, 2026, and as of that date is repealed.
SEC. 7.
Section 6012.3 is added to the Revenue and Taxation Code, to read:
6012.3.
(a) For purposes of this part, “gross receipts” and “sales price” do not include that portion of the sales price returned to the purchaser of a used motor vehicle or any restocking fees pursuant to Section 1784.43 of the Civil Code.
(b) This section shall become operative October 1, 2026.
SEC. 8.
Section 11709.2 of the Vehicle Code is amended to read:
11709.2.
(a) Every dealer shall conspicuously display a notice, not less than 8 inches high and 10 inches wide, in each sales office and sales cubicle of a dealer’s established place of business where written terms of specific sale or lease transactions are discussed with prospective purchasers or lessees, and in each room of a dealer’s established place of business where sale and lease contracts are regularly executed, which states the following:
“THERE IS NO COOLING-OFF PERIOD UNLESS YOU OBTAIN A CONTRACT CANCELLATION OPTION
California law does not provide for a “cooling-off” or other cancellation period for vehicle lease or purchase contracts. Therefore, you cannot later cancel such a contract simply because you change your mind, decide the vehicle costs too much, or wish you had acquired a different vehicle. After you sign a motor vehicle purchase or lease contract, it may only be canceled with the agreement of the seller or lessor or for legal cause, such as fraud.
However, California law does require a seller to offer a 2-day contract cancellation option on used vehicles with a purchase price of less than $40,000, subject to certain statutory conditions. This contract cancellation option requirement does not apply to the sale of a recreational vehicle, a motorcycle, or an off-highway motor vehicle subject to identification under California law. See the vehicle contract cancellation option agreement for details.”
(b) This section shall remain in effect only until October 1, 2026, and as of that date is repealed.
SEC. 9.
Section 11709.2 is added to the Vehicle Code, to read:
11709.2.
(a) Every dealer shall conspicuously display a physical notice, in at least 36-point type, in each sales office and sales cubicle of a dealer’s established place of business where written terms of specific sale or lease transactions are discussed with prospective purchasers or lessees, and in each room of a dealer’s established place of business where sale and lease contracts are regularly executed that states the following:
“CALIFORNIA DOES NOT HAVE A COOLING-OFF PERIOD FOR NEW VEHICLES. BUT IF YOU PURCHASED OR LEASED A USED VEHICLE FOR $50,000 OR LESS, YOU HAVE 3 DAYS TO CANCEL THIS CONTRACT FOR ANY REASON. ADDITIONAL RESTRICTIONS MAY APPLY, INCLUDING A RESTOCKING FEE. ASK THE DEALER FOR MORE INFORMATION ABOUT HOW TO EXERCISE THIS RIGHT.”
(b) If the dealer also sells or leases motorcycles or off-highway motor vehicles at the same location as vehicles subject to the right to cancel, the physical notice shall contain the following additional language, in at least 36-point type:
“This cooling-off period also does not apply to the sale of a motorcycle or an off-highway motor vehicle subject to registration under California law. See the vehicle contract for details.”
(c) This section shall become operative October 1, 2026.
SEC. 10.
Section 11713.21 of the Vehicle Code is amended to read:
11713.21.
(a) (1) A dealer shall not sell a used vehicle, as defined in Section 665 and subject to registration under this code, at retail to an individual for personal, family, or household use without offering the buyer a contract cancellation option agreement that allows the buyer to return the vehicle without cause. This section does not apply to a used vehicle having a purchase price of forty thousand dollars ($40,000) or more, a motorcycle, as defined in Section 400, or a recreational vehicle, as defined in Section 18010 of the Health and Safety Code.
(2) The purchase price for the contract cancellation option shall not exceed the following:
(A) Seventy-five dollars ($75) for a vehicle with a cash price of five thousand dollars ($5,000) or less.
(B) One hundred fifty dollars ($150) for a vehicle with a cash price of more than five thousand dollars ($5,000), but not more than ten thousand dollars ($10,000).
(C) Two hundred fifty dollars ($250) for a vehicle with a cash price of more than ten thousand dollars ($10,000), but not more than thirty thousand dollars ($30,000).
(D) One percent of the purchase price for a vehicle with a cash price of more than thirty thousand dollars ($30,000), but less than forty thousand dollars ($40,000).
The term “cash price” as used in this paragraph has the same meaning as described in subparagraph (A) of paragraph (1) of subdivision (a) of Section 2982 of the Civil Code. “Cash price” also excludes registration, transfer, titling, and license fees, the California tire fee, and any charge to electronically register or transfer the vehicle.
(b) To comply with subdivision (a), and notwithstanding Section 2981.9 of the Civil Code, a contract cancellation option agreement shall be contained in a document separate from the conditional sales contract or other vehicle purchase agreement and shall contain, at a minimum, the following:
(1) The name of the seller and the buyer.
(2) A description and the Vehicle Identification Number of the vehicle purchased.
(3) A statement specifying the time within which the buyer must exercise the right to cancel the purchase under the contract cancellation option and return the vehicle to the dealer. The dealer shall not specify a time that is earlier than the dealer’s close of business on the second day following the day on which the vehicle was originally delivered to the buyer by the dealer.
(4) A statement that clearly and conspicuously specifies the dollar amount of any restocking fee the buyer must pay to the dealer to exercise the right to cancel the purchase under the contract cancellation option. The restocking fee shall not exceed one hundred seventy-five dollars ($175) if the vehicle’s cash price is five thousand dollars ($5,000) or less, three hundred fifty dollars ($350) if the vehicle’s cash price is less than ten thousand dollars ($10,000), and five hundred dollars ($500) if the vehicle cash price is ten thousand dollars ($10,000) or more. The dealer shall apply toward the restocking fee the price paid by the buyer for the contract cancellation option. The price for the purchase of the contract cancellation option is not otherwise subject to setoff or refund.
(5) Notwithstanding paragraph (4), when a buyer, who leased the purchased vehicle immediately preceding the dealer’s sale of the vehicle to the buyer, exercises the contract cancellation option, the limit on the amount of a restocking fee required to be paid by the buyer shall be increased. That increased amount shall be the amount the buyer would have been obligated to pay the lessor, at the time of the termination of the lease, for the following charges, as specified in the lease, and as if the buyer had not purchased the contract cancellation option:
(A) Excess mileage.
(B) Unrepaired damage.
(C) Excess wear and tear.
(6) A statement specifying the maximum number of miles that the vehicle may be driven after its original delivery by the dealer to the buyer to remain eligible for cancellation under the contract cancellation option. A dealer shall not specify fewer than 250 miles in the contract cancellation option agreement.
(7) A statement that the contract cancellation option gives the buyer the right to cancel the purchase and obtain a full refund, minus the purchase price for the contract cancellation option agreement; and that the right to cancel will apply only if, within the time specified in the contract cancellation option agreement, the following are personally delivered to the selling dealer by the buyer: a written notice exercising the right to cancel the purchase signed by the buyer; any restocking fee specified in the contract cancellation option agreement minus the purchase price for the contract cancellation option agreement; the original contract cancellation option agreement and vehicle purchase contract and related documents, if the seller gave those original documents to the buyer; all original vehicle titling and registration documents, if the seller gave those original documents to the buyer; and the vehicle, free of all liens and encumbrances, other than any lien or encumbrance created by or incidental to the conditional sales contract, any loan arranged by the dealer, or any purchase money loan obtained by the buyer from a third party, and in the same condition as when it was delivered by the dealer to the buyer, reasonable wear and tear and any defect or mechanical problem that manifests or becomes evident after delivery that was not caused by the buyer excepted, and which must not have been driven beyond the mileage limit specified in the contract cancellation option agreement. The agreement may also provide that the buyer will execute documents reasonably necessary to effectuate the cancellation and refund and as reasonably required to comply with applicable law.
(8) At the bottom of the contract cancellation option agreement, a statement that may be signed by the buyer to indicate the buyer’s election to exercise the right to cancel the purchase under the terms of the contract cancellation option agreement, and the last date and time by which the option to cancel may be exercised, followed by a line for the buyer’s signature. A particular form of statement is not required, but the following statement is sufficient: “By signing below, I elect to exercise my right to cancel the purchase of the vehicle described in this agreement.” The buyer’s delivery of the purchase cancellation agreement to the dealer with the buyer’s signature following this statement shall constitute sufficient written notice exercising the right to cancel the purchase pursuant to paragraph (6). The dealer shall provide the buyer with the statement required by this paragraph in duplicate to enable the buyer to return the signed cancellation notice and retain a copy of the cancellation agreement.
(9) If, pursuant to paragraph (5), the limit on the restocking fee is increased by the amount the buyer, who exercises a contract cancellation option would have been obligated to pay the lessor, upon termination of the lease, for charges for excess mileage, unrepaired damage, or excess wear and tear, as specified in the lease, the dealer shall provide the buyer with a notice of the contents of paragraph (5), including a statement regarding the increased restocking fee.
(c) (1) No later than the second day following the day on which the buyer exercises the right to cancel the purchase in compliance with the contract cancellation option agreement, the dealer shall cancel the contract and provide the buyer with a full refund, including that portion of the sales tax attributable to amounts excluded pursuant to Section 6012.3 of the Revenue and Taxation Code.
(2) If the buyer was not charged for the contract cancellation option agreement, the dealer shall return to the buyer, no later than the day following the day on which the buyer exercises the right to cancel the purchase, any motor vehicle the buyer left with the seller as a downpayment or trade-in. If the dealer has sold or otherwise transferred title to the motor vehicle that was left as a downpayment or trade-in, the full refund described in paragraph (1) shall include the fair market value of the motor vehicle left as a downpayment or trade-in, or its value as stated in the contract or purchase order, whichever is greater.
(3) If the buyer was charged for the contract cancellation option agreement, the dealer shall retain any motor vehicle the buyer left with the dealer as a downpayment or trade-in until the buyer exercises the right to cancel or the right to cancel expires. If the buyer exercises the right to cancel the purchase, the dealer shall return to the buyer, no later than the day following the day on which the buyer exercises the right to cancel the purchase, any motor vehicle the buyer left with the seller as a downpayment or trade-in. If the dealer has inadvertently sold or otherwise transferred title to the motor vehicle as the result of a bona fide error, notwithstanding reasonable procedures designed to avoid that error, the inadvertent sale or transfer of title shall not be deemed a violation of this paragraph, and the full refund described in paragraph (1) shall include the retail market value of the motor vehicle left as a downpayment or trade-in, or its value as stated in the contract or purchase order, whichever is greater.
(d) If the dealer received a portion of the purchase price by credit card, or other third-party payer on the buyer’s account, the dealer may refund that portion of the purchase price to the credit card issuer or third-party payer for credit to the buyer’s account.
(e) Notwithstanding subdivision (a), a dealer is not required to offer a contract cancellation option agreement to an individual who exercised the individual’s right to cancel the purchase of a vehicle from the dealer pursuant to a contract cancellation option agreement during the immediately preceding 30 days. A dealer is not required to give notice to a subsequent buyer of the return of a vehicle pursuant to this section. This subdivision does not abrogate or limit any disclosure obligation imposed by any other law.
(f) This section does not affect or alter the legal rights, duties, obligations, or liabilities of the buyer, the dealer, or the dealer’s agents or assigns, that would exist in the absence of a contract cancellation option agreement. The buyer is the owner of a vehicle when the buyer takes delivery of a vehicle until the vehicle is returned to the dealer pursuant to a contract cancellation option agreement, and the existence of a contract cancellation option agreement shall not impose permissive user liability on the dealer, or the dealer’s agents or assigns, under Section 460 or 17150 or otherwise.
(g) This section does not affect the ability of a buyer to rescind the contract or revoke acceptance under any other law.
(h) This section shall become operative on July 1, 2012.
(i) This section shall remain in effect only until October 1, 2026, and as of that date is repealed.