Used Car Contract Cancellation Option
California Used Car Cancellation Option Rules
A dealer selling a used car for less than $40K is required to offer the option to the buyer to purchase a 2-day “cooling off” period.1California’s Vehicle Code Section 11713.21
The contract cancellation option agreement does not apply to used cars priced at $40,000 or more, new cars, private party sales, motorcycles, off-highway vehicles, recreational vehicles, or vehicles sold for business or commercial use (does not include pickup trucks purchased for personal use).
Cancellation Option Specifics
If you choose to purchase the contract cancellation option agreement, you are required to pay no more than:
- $75 for a vehicle costing $5,000 or less.
- $150 for a vehicle costing $5,001–$10,000.
- $250 for a vehicle costing $10,001–$30,000.
- 1% of the purchase price for a vehicle costing $30,001–39,999.
If you return the vehicle within the time specified, the dealer may charge a maximum restocking fee of:
- $175 for a vehicle costing $5,000 or less.
- $350 for a vehicle costing $5,001–$10,000.
- $500 for a vehicle costing $10,001–39,999.
NOTE: The contract cancellation option agreement fee is nonrefundable. However, if the dealer charges a restocking fee, they must deduct the contract cancellation option agreement fee from the restocking fee. If the dealer did not charge for the contract cancellation option agreement and sold or transferred title of the vehicle the buyer used as a down payment or trade-in, the fair market value or value stated in the sales contract must be refunded, whichever is greater.
Returning the Car
If you choose to exercise your cancellation option, you 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 for the sale and contract cancellation option agreement.
- In the same condition as received, except for reasonable wear and tear and defects or mechanical problems which occurred after the buyer took possession of the vehicle.
- Free of all liens and encumbrances, other than those created by the sales contract.
The dealer must provide a full refund of the sales tax, registration fees, and deposit or trade-in vehicle collected from the buyer. If the buyer did not return the vehicle by the standards above, the dealer may refuse the return of the vehicle; however, a written notice must be provided to the buyer.
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