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Buying and Maintaining a Car

Buying a new or used car can be one of the most expensive purchases we make. It is important to take your time in deciding which car to buy and from whom, and not be rushed by anyone who wants your money or your signature on a contract. Once you have decided on the car that most fits your needs and budget, shop around for a competitive price, know the car’s history (if used or prior leased), and be prepared to walk away if your questions are not being answered to your satisfaction.

Car Buyer's Bill of Rights

The Car Buyer's Bill of Rights became effective July 1, 2006, and covers vehicle sales by licensed car dealers in California. This law does not apply to motorcycles and off-highway motor vehicles or to transactions between private parties. The new law says that Dealers must provide an itemized price list for items such as warranties and insurance, etc., if the items are being financed. Also, Dealers must provide buyers with their credit score and an explanation of how it is used.

For Used Car Buyers – Right to Cancel

There is no "cooling off" or right to cancel unless you obtain a Contract Cancellation Option Agreement. If the used car you are buying is less than $40,000, you must be provided with the opportunity to purchase a 2-day Sales Contract Cancellation Option Agreement. If you purchase the 2-day Sales Contract Cancellation Option Agreement, you have the right the right to return the vehicle and receive a full refund of the sales tax, registration fees, and any deposit or trade-in vehicle (or value for trade if already sold).The Contract Cancellation Option Agreement does not apply to used cars priced at $40,000 or more, new cars, private party sales, motorcycles, off-road vehicles, recreational vehicles, or vehicles sold for business or commercial use. To purchase this Option Agreement, you can be charged a non-refundable fee ranging from $75 to as much as 1% of sale price of the car. If you choose to return the vehicle within the time specified, the dealer can also charge a restocking fee ranging from $175 to $500, but if they do, the fee paid to purchase the Option Agreement must be refunded.

If you trade in a car, be aware that if the dealer did not charge for the Contract Cancellation Option Agreement and has sold or transferred title of the vehicle that you used as a down payment or trade-in, the fair market value or value stated in the sales contract must be refunded to you, whichever is greater.

In addition, the buyer must return the vehicle:

  • To the dealer where purchased by close of business within two days, or within the time-frame allowed by the contract.
  • Without exceeding the miles permitted by the contract.
  • With all original receipts of the sales and Contract Cancellation Option Agreement.
  • In the same condition as it was received, except for reasonable wear and tear and any defects or mechanical problems occurring after the buyer takes possession of the vehicle.
  • Free of all liens and encumbrances, other than any lien or encumbrance created by the sales contract.

Dispute with Your Car Dealer?

New Motor Vehicle Board – Mediation Program

The New Motor Vehicle Board operates a Consumer Mediation Services Program, which attempts through informal mediation to resolve disputes between consumers and new motor vehicle dealers. If you have a contractual dispute (purchase or lease) or a warranty/repair dispute with a new motor vehicle dealer, contact the New Motor Vehicle Board for assistance:

New Motor Vehicle Board
1507 21st Street, Suite 330
Sacramento, CA 95811
Phone: (916) 445-1888

The Department of Motor Vehicles (DMV) licenses and regulates new and used motor vehicle dealers. If you would like to report fraud by a motor vehicle dealer, contact the Department of Motor Vehicles, Division of Investigations, for assistance. DMV Record of Complaint Form.

Consumer Motor Vehicle Recovery Corporation- Recovery Fund

Has the licensed dealership where you purchased, leased or consigned your vehicle gone out of business or filed for bankruptcy and failed to honor the terms of your contract? The Consumer Motor Vehicle Recovery Corporation (CMVRC) may be able to help you. In July of 2008, the California legislature created the CMVRC. The CMVRC has established a Consumer Recovery Fund for the payment of claims by California consumers who suffer economic losses, as a result of a California licensed dealer filing for bankruptcy or going out of business, and failing to:

  • submit the license or registration fees received or contractually obligated to be paid from a consumer to the Department of Motor Vehicles (DMV)
  • pay to the legal owner of the trade-in vehicle used by the consumer as part of the transaction the amount necessary to discharge the prior credit balance owed to the legal owner
  • pay to the registered lessor of the trade-in vehicle used by a consumer in the transaction the amount the dealer agreed to pay to the registered lessor
  • pay the amount specified in a consignment agreement to the consumer after the sale of a consigned vehicle
  • provide good title, free of liens or other claims
  • pay third parties for insurance, service contracts, or goods or services purchased through the dealer

The CMVRC reviews and processes all claims made against the Recovery Fund. If the CMVRC approves your claim, you may be entitled to reimbursement for up to $35,000 of your economic loss resulting from the licensed dealer’s failure to honor the terms of the sales or lease contract.

To file a claim with the CMVRC, go to the CMVRC website. You may submit your claim electronically or mail it to:

CMVRC Claims Administrator
P.O. Box 8060
San Rafael, CA 94912-8060
Phone: 800-961-6175

My Car is Broken and I Need Help!

Motor Vehicle Warranty and Lemon Law

A purchaser or lessee of a motor vehicle has various rights under both state and federal law if the vehicle does not perform as provided under an express warranty. Warranty law can be complex, and it is impossible to describe comprehensively all of the law in a brief space. The following briefly explains the Song-Beverly Consumer Warranty Act and what is popularly known as the "Lemon Law."

Because the law is complex, however, you should consult with a lawyer who can best advise you of your rights under the particular circumstances of your case.

Overview of Song-Beverly Warranty Rights: The Song-Beverly Consumer Warranty Act provides protection for consumers who lease or buy new motor vehicles. The law requires that if the manufacturer or its representative in this state, such as an authorized dealer, is unable to service or repair a new motor vehicle to meet the terms of an express written warranty after a reasonable number of repair attempts, the manufacturer is required promptly to replace the vehicle or return the purchase price to the lessee or buyer. The purchase price that must be returned includes the price paid for manufacturer-installed items and transportation but does not include the price paid for nonmanufacturer items installed by the dealer. The lessee or buyer is completely free to choose whether to accept a replacement or a refund. Whatever the choice, the manufacturer is also responsible to pay for sales or use tax; license, registration, and other official fees; and incidental damages that the lessee or buyer may have incurred such as finance charges, repair, towing, and rental car costs.

The lessee or buyer may be charged for the use of the vehicle regardless of whether the vehicle is replaced or the purchase price is refunded. The amount that may be charged for use is determined by multiplying the actual price of the new vehicle by a fraction having as its denominator 120,000 and as its numerator the number of miles traveled by the vehicle before it was first brought in for correction of the problem. For example, if the car had traveled 6,000 miles before it was first brought in for correction of the problem, the lessee or buyer could be charged 5% (6,000/120,000 = 5%) of the purchase price for usage.

The law applies for the entire period of your warranty. It does not apply if the problem was caused by abuse after the vehicle was delivered. Be sure you follow the terms of the warranty for maintenance and proper use of the vehicle.

Although there is a four-year statute of limitations to bring a law suit for breach of warranty or for violations of Song-Beverly, you should act promptly to try to resolve the problem fairly and quickly without legal action if possible.

The “Lemon Law”: A special provision, often called the "Lemon Law," helps determine what is a reasonable number of repair attempts for problems that substantially impair the use, value, or safety of the vehicle. The "Lemon Law" applies to these problems if they arise during the first 18 months after the consumer received delivery of the vehicle or within the first 18,000 miles on the odometer, whichever occurs first. During the first 18 months or 18,000 miles, the "Lemon Law" presumes that a manufacturer has had a reasonable number of attempts to repair the vehicle if either (1) the same problem results in a condition that is likely to cause death or serious bodily injury if the vehicle is driven and the problem has been subject to repair two or more times by the manufacturer or its agents, and the buyer or lessee has at least once directly notified the manufacturer of the need for the repair of the problem as provided in the warranty or owner's manual or (2) the same problem has been subject to repair four or more times by the manufacturer or its agents and the buyer has at least once directly notified the manufacturer of the need for the repair of the problem as provided in the warranty or owner's manual or (3) the vehicle is out of service because of the repair of any number of problems by the manufacturer or its agents for a cumulative total of more than 30 days since delivery of the vehicle.

The "Lemon Law" presumption is a guide, not an absolute rule. For additional information, see the Department of Consumer Affairs publication “Lemon-aid For Consumers", pdf.

Coverage For Vehicles That Are Not "New": Although the special provisions discussed above apply to new motor vehicles, Song-Beverly has many general rules that apply to any consumer product sold with an express written warranty. As a result, there is important coverage for motorcycles, the living quarters of a mobile home, used vehicles sold with a dealer's express written warranty, "lemon" vehicles repurchased by the manufacturer and sold to consumers with an express written warranty covering the defect, and vehicles sold with a service contract.

For complete advice concerning your legal rights, you should consult your own attorney.

Auto Repair

Auto Repair Shops: The Bureau of Automotive Repair enforces the Automotive Repair Act, which requires all California automobile repair dealers to register with the bureau. The bureau mediates complaints from consumers; investigates allegations of illegal actions by automotive repair dealers; assists law enforcement agencies in disciplinary action, and provides educational material for consumers. Consumers are encouraged to call or write to the Bureau of Automotive Repair in Sacramento, or visit any district office with any question or complaint. For a directory of district offices, visit the Bureau of Automotive Repair website. The bureau's toll-free telephone number is (800) 952-5210.

Other Consumer Alternatives

Many consumers feel it is worthwhile to contact their local Better Business Bureau to register complaints regarding area businesses. Refer to the business section of your local telephone directory for the address and/or telephone number of the Better Business Bureau in your area.

For assistance and guidance in filing consumer complaints, contact:

California Attorney General

Bureau of Automotive Repair

Arbitration Certification Program

New Motor Vehicle Board
(916) 445–1888

Consumer Motor Vehicle Recovery Corporation

For help finding the right government agency to assist with your problem, contact:

California Department of Consumer Affairs


When using this fast facts brochure, please remember that it is only a summary of the law. DMV, law enforcement, and the courts follow the full and exact language of the law contained in the California Vehicle Code and California Civil Code. If there is a conflict, this brochure cannot be relied upon as the law.

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