California buyers of qualifying used vehicles now have an automatic three-day right to cancel a purchase or lease through a licensed dealer. The rule, part of the state’s Combating Auto Retail Scams Act, applies to vehicles priced at $50,000 or less—but returning one can cost as much as $750.

The three-calendar-day period begins the day after the sales contract is signed, with weekends included. If the dealership is closed when the deadline arrives, the buyer can return the vehicle on the next day the business is open. Buyers do not have to purchase a separate cancellation option in advance.

Limits on eligible returns

To qualify, the vehicle must be returned to the selling dealer during business hours, and the buyer must have driven no more than 400 miles. It must also be in essentially the same condition as when it was delivered. Reasonable wear and mechanical issues that develop without the buyer causing them do not automatically disqualify the return.

The policy excludes new vehicles, private-party transactions, motorcycles, and qualifying auction sales. It is also not intended to function as a free short-term rental, since dealers can apply several charges when a vehicle is returned.

How the return fee is calculated

A dealer may impose a restocking charge equal to 1.5% of the vehicle’s sale price, subject to a $200 minimum and a $600 maximum. Buyers who drive more than 250 miles can also be charged $1 for every additional mile, up to another $150.

For example, returning a $40,000 vehicle after driving 400 miles could result in the maximum $750 charge. When the dealer paid for shipping, it may retain the actual shipping cost instead of applying the standard restocking fee, although the same cap applies.

Trade-ins and refunds

The law also sets rules for trade-in vehicles. Dealers generally must return a trade-in after a valid cancellation. If it has already been sold or its title transfer has begun, the dealer must pay the highest of the agreed trade-in value, the sale price, or the vehicle’s fair market value, subject to any remaining loan.

Dealers generally have 48 hours after a valid cancellation to unwind the transaction and issue a refund. Payment verification can extend that timeline.

The law also includes provisions requiring clearer total prices and limiting unwanted or worthless add-ons. California estimates those pricing changes could save buyers $234 million each year. The return provision gives qualifying used-car shoppers a defined way to leave a purchase that does not meet expectations.