Beginning with used car sales in July 2006, California used car buyers can pay a fee to obtain a two-day right to return the car for any reason. The fee varies from $75 to $400 depending on the price of the car. Buyers of older vehicles especially are advised to pay the fee for this protection. There are of course restrictions on the return.The buyer can return the vehicle for any reason. If the car breaks down, the buyer can still return it. However, the right to undo the deal has many restrictions, as you would imagine: a) the buyer can only put up to 250 miles on the vehicle before turning it in and b) the buyer has to pay a “restocking fee” (from $175 to $500) depending on the price of the vehicle. However, in turning in the vehicle, the buyer gets a credit for the fee paid for the two-day cancellation option. This means the net cost of returning the vehicle would be $100 to $200 depending on the purchase price of the vehicle.
Cars or trucks costing over $40,000 are not covered nor are RVs or motorcycles.
If the buyer had a trade-in vehicle, the dealer is obligated to give it back. One problem with the new law is that the dealer does not have to return the vehicle under the third day after the purchase of the car being returned. So the buyer cancels on day 2 and turns in the car and is then stuck without his or her trade-in until day 3. This means the buyer may have no transportation for a day.
If the dealer sold the trade-in in the two day period, the dealer must pay the buyer either the price the dealer agreed to pay for the trade-in or retail market value, whichever is higher.
Once a vehicle is turned back in, the dealer has to cancel any car loan it arranged.
