Newsom Signs SB 766: How the Law Taking Effect October 1 Works for Car Buyers

California consumers buying or leasing certain used vehicles will soon have a three-day window to cancel their contracts without penalty, thanks to a new law signed by Governor Gavin Newsom.

The legislation, known as SB 766 or the CARS Act (Consumer Assistance and Recovery for Services), takes effect on October 1, 2026. It applies to used vehicles priced up to $50,000 purchased or leased from a dealership. Under the new rules, buyers will receive a separate document detailing their right to cancel within three business days for any reason.

This right expires at the close of business on the third calendar day after the contract is signed. If the dealership is closed on that third day, the cancellation period extends to the next business day. However, dealerships may charge a restocking fee, capped at 1.5% of the sale price, with a minimum of $200 and a maximum of $600. Additional charges may apply if the vehicle is driven more than 250 miles, at a rate of $1 per mile over the limit, up to an extra $150.

Furthermore, SB 766 aims to curb deceptive sales practices by prohibiting dealerships from charging for additional products that offer no real benefit to the buyer. This includes banning the sale of unnecessary services like oil change contracts for electric vehicles or charging for catalytic converter etching on cars that lack the part. The law also sets standards for nitrogen-filled tires, requiring at least 95% purity for sellers to apply a charge.