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When must auto dealers offer a 2-day contract cancellation?

On Behalf of | Mar 1, 2024 | Auto Dealership Law |

Auto dealers in California deal with contracts every day, whether they sell new or pre-owned vehicles. But there are special contracts that the state requires to be offered to the customer in some cases when a used car is being purchased. Auto dealers must understand this contract and follow the regulations to prevent dealing with legal issues from an unhappy customer who may regret purchasing a used vehicle.

Offering a two-day cancellation contract

California requires car dealers to offer customers a two-day contract cancellation option when the purchased used car has a price below $40,000. Dealers are required to offer this option to customers and are authorized to collect a fee if a customer wishes to purchase the agreement. The fee is directly related to the purchase price of the car.

Auto dealers must honor the two-day cancellation if the customer returns the car within the agreed-upon time limit. Dealers may charge a restocking fee, but they are required to deduct the cost of the original contract agreement fee from the restocking fee. The contract cancellation fee is non-refundable.

Seek legal advice when questions arise

Like other states, California has specific laws in place that are designed to protect consumers when purchasing a vehicle. Auto dealers must be aware of these laws, so they don’t run into legal problems if a customer becomes unhappy with their purchase. Auto dealers who have questions or concerns about a contract with a customer can benefit from consulting an attorney who is knowledgeable in the state’s auto dealership laws.



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