Does your customer have a legal right to return the vehicle, or only whatever your store voluntarily promised? Since October 1, 2026, qualifying California used-vehicle purchases and leases carry a mandatory three-day cancellation right under the California Legislature’s enacted SB 766. The vehicle-price ceiling is $50,000, inclusive.
For you at the desk or in finance and insurance (F&I), eligibility comes before the customer’s reason. A qualifying buyer need not prove a defect, but the transaction and return must meet the statute’s conditions.
The paid cancellation option has been replaced
The earlier arrangement required dealers to offer an optional two-day cancellation agreement on qualifying used-car purchases below $40,000. Buyers could be charged for that option, as described in the California Legislature’s former Vehicle Code section 11713.21, reproduced in SB 766. Subdivision (i) expressly records that section’s repeal on October 1, 2026.
SB 766 replaced that arrangement on the operative date. You cannot charge customers to acquire the new right, and consumers cannot validly waive it. Permitted charges arise when the customer cancels.
Which transactions pass the eligibility test?
The following branches apply the California Legislature’s definitions in Civil Code section 1784.31 and its cancellation provisions in section 1784.43. The transaction must meet the coverage requirements and avoid the exclusions.
| Eligibility question | Effect on coverage |
|---|---|
| Dealer retail sale or lease of a used vehicle? | Continue if yes. New vehicles, ordinary private-party sales and wholesale transactions do not qualify. |
| Covered vehicle? | Registration must be required, and gross vehicle weight rating must be below 10,000 pounds. Motorcycles and off-highway vehicles requiring identification rather than registration are excluded. |
| Vehicle price at or below $50,000? | Exactly $50,000 qualifies; higher prices do not. |
| Excluded business purchase? | Excluded: multiple vehicles in one primarily business-use transaction, or a buyer purchasing at least five vehicles annually from that dealer primarily for business use. |
| Purchase of a vehicle already held under a lease? | That lease buyout is excluded. A qualifying used-vehicle lease itself can be covered. |
| Auction sale? | Excluded if the vehicle meets Vehicle Code Division 12 equipment requirements. |
Business use alone is not a blanket exclusion. Nor does the new cancellation section retain the old blanket exclusion for recreational vehicles: a motorhome must pass the applicable vehicle-definition and weight tests.
The California DMV’s public CARS Act summary describes fleet sales using a five-unit threshold. But SB 766, section 1784.31(f)(2)(C), defines an excluded fleet sale as multiple vehicles in one primarily business-use transaction. Five applies to the separate annual commercial-purchaser exclusion in section 1784.31(f)(2)(D).
Section 1784.43 does not itemize how taxes and add-ons affect the threshold. For a borderline deal, have counsel resolve that treatment. Do not assume that either the amount financed or the separately defined advertising total determines eligibility.
The return period runs in calendar days
Under section 1784.31(i)(1)-(3), the clock starts on the calendar date following execution of the purchase or lease. It ends when the dealership closes on the third calendar day. If the dealership is closed to the public that day, the deadline moves to closing time on its next public business day.
This is not a rolling 72-hour period, and weekends are not automatically skipped. The California DMV’s September 22, 2026 bulletin, OLIN 2026-10, says business days. SB 766’s enacted definition in section 1784.31(i) expressly uses calendar days. Use the statutory clock.
For example, assume a contract signed Thursday, October 1, 2026, at a store closed Sunday and open Monday. The counted days are October 2, 3 and 4. Because the third day falls on Sunday, the deadline extends to closing on Monday, October 5.
A cancellation requires a timely physical return
Under SB 766, section 1784.43(b) and (e), dealers must provide both a separate disclosure titled “3-Day Right to Cancel Used Car Purchase or Lease” and the prescribed notice on the contract’s first page. The separate disclosure must explain the deadline and return conditions, including both fee components. It must also be provided in the applicable language when negotiations primarily use a language specified in Civil Code section 1632(b).
The customer must personally deliver the vehicle to the selling or leasing dealer during business hours, together with any other money or items received through the transaction. Any restocking balance not covered by the refund is also due. A phone call or email alone does not satisfy these conditions.
More than 400 miles driven between contract execution and attempted cancellation defeats this statutory right. Exactly 400 does not. The vehicle must have no liens or encumbrances unrelated to the transaction.
The condition standard allows reasonable wear and tear, plus a defect or mechanical problem that appears after delivery and was not caused by the customer. You must document damage beyond ordinary wear; an unsupported damage allegation cannot justify blocking the return.
Restocking fees, mileage charges and shipping retention
Section 1784.31(g)(1)(A) sets the base restocking fee at 1.5% of the sale price, with a $200 minimum and $600 maximum. You may charge less or nothing. Subdivision (g)(2) permits an additional $1 per mile beyond 250, capped at $150.
Under SB 766, section 1784.31(g)(1)(B), if you charged for transportation, you may retain actual shipping cost instead of the base fee. Retention cannot exceed the calculated base restocking fee for that vehicle, not simply $600. Refund any excess shipping charge; do not stack shipping retention onto the base fee.
For a worked fee comparison, assume the prices below and a qualifying return after 400 miles. Each total includes a $150 mileage charge and assumes the dealer charges the full permitted fee, without shipping retention.
| Sale price | 1.5% calculation | Base after limits | Total with mileage |
|---|---|---|---|
| $10,000 | $150 | $200 | $350 |
| $20,000 | $300 | $300 | $450 |
| $50,000 | $750 | $600 | $750 |
For the $20,000 vehicle, retaining shipping instead would be limited to $300. The mileage component remains separate.
Under section 1784.43(a)(2), deduct the fee from the refund first. Only an uncovered balance is payable separately at cancellation. The statute does not authorize extra processing or detailing charges.
A valid return requires the dealership to unwind the deal
Section 1784.43(d) requires you to cancel the contract and refund the customer, less authorized deductions, within 48 hours after the customer exercises the right to cancel. For an unverified payment such as a check, you may wait until two business days after verification, but must give the customer documentation showing when verification occurred. You are not responsible for financial-institution delays outside your control.
Under section 1784.43(a)(3), return the trade-in and all supplied keys unless you sold it or began transferring its title. In that case, pay the highest of the contractual allowance, resale proceeds or fair market value, less the amount needed to satisfy secured debt on the trade.
If you say the trade was sold, provide the sale document with the next buyer’s personal information removed. The cancellation receipt must record when the customer exercised the right and itemize deductions.
For a financed sale, unwinding the contract means coordinating with its holder; putting the vehicle back in inventory does not cancel financing. Section 1784.43(b)(7) permits reasonably necessary cancellation paperwork. Subdivision (c) prohibits obstruction, including claiming that the person authorized to release funds or the trade is unavailable.
The deadline does not settle every later dispute
The California Legislature preserved other remedies in SB 766, section 1784.22. Section 1784.43(f) also preserves rescission and revocation rights under other laws. A warranty claim or an allegation of misrepresentation therefore requires its own assessment after this return period closes.
First decide whether the transaction and return qualify for mandatory cancellation. If they do not, that answers this particular return-right question, not whether the customer has another valid claim.