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California enacts first ‘Bill of Rights’ for buyers of used cars

November 22, 2010

Used-vehicle buyers in California would be permitted a two-day cooling-off period in which they could return a vehicle for any reason, under legislation signed July 26 by Gov. Arnold Schwarzenegger. The law takes effect July 1, 2006. 

The new law, known as the Car Buyer’s Bill of Rights, also establishes standards for dealers to declare a used vehicle as "certified," and restricts markups on loan rates, to 2.5 percent on loans up to 60 months and to 2 percent for longer loans.

 

Schwarzenegger vetoed a similar bill last year after strong opposition from the the California Motor Car Dealers Association. This time, the bill was softened in several key areas and drew the association’s support. 

For instance, the original bill called for a mandatory three-day cooling-off period during which a customer could return a used car for no charge. The new bill permits a refund as an option available only to customers who pay a restocking fee at closing, from $75 to $400, depending on the vehicle’s value.

 

The two-day cancellation option would apply only for used vehicles that sell for less than $40,000 and which are not driven more than 250 miles. 

A used car could not be labeled or advertised as "certified" if it ever was in a significant accident, had major damage that had been repaired, or returned under warranty

 

Another bill highlight: If the vehicle seller arranges a loan for the buyer, the seller must disclose the buyer’s credit score as reported by an identified reporting agency. 

Schwarzenegger said the measure strikes the right balance to meet consumer needs and fairness to dealers.

 

The Car Buyer’s Bill of Rights is going to keep one of California’s leading retail industries booming and strengthen the consumer faith and trust that is so essential to our vibrant economy," Schwarzenegger said after the bill signing.

 

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