California’s new car dealership laws give buyers layered protection: dealers must sell at or below the advertised price, disclose every fee and optional add-on in writing before you sign, keep documentation charges under a state-set cap, and route defective vehicles back to the manufacturer for a refund or replacement under the state’s lemon law. The rules are stronger than most buyers realize, but they only help if you know what to look for on the sticker, the pre-contract disclosure, and the sales contract itself.
The Advertised Price Is the Ceiling
A California dealer has to sell you a vehicle at or below its advertised price, whether or not you saw the ad before walking in. That price must include every cost you would pay at the time of sale, with narrow exceptions for government registration fees and taxes, emission testing charges up to $50, and the dealer’s document preparation charge. Every ad must identify a specific vehicle by model, year, and either its license number or part of the VIN, and the dealer cannot advertise a vehicle it does not actually have available.
False advertising is a misdemeanor in California, punishable by up to six months in county jail, a fine of up to $2,500, or both.1California Legislative Information. California Code BPC 17500 – False Advertising in General If a dealer quotes you a higher number at the desk than the ad shows, that alone is a violation.
Markups Above MSRP
Charging more than the manufacturer’s suggested retail price is legal in California, but the markup has to be visible. If a dealer puts a supplemental sticker on a new car, that sticker must state in its largest print that the price shown is the dealer’s asking price and not the MSRP. It must also list the MSRP itself and itemize every add-on and its price. Anything left over between the sticker total and the MSRP plus add-ons has to be labeled “added mark-up.”2California Legislative Information. California Vehicle Code 11713.1 Compare the supplemental sticker to the factory window sticker and you should be able to account for every dollar.
Fees and Add-Ons You Can Refuse
The Documentation Preparation Fee, the “doc fee,” covers the dealer’s paperwork processing. California caps it at $85 when the dealer participates in the DMV’s electronic filing program, and $70 when it does not.3California Department of Motor Vehicles. Vehicle Industry Registration Procedures Manual – Dealer’s Document Preparation and Electronic Filing Service Fee It is a dealer charge, not a government fee, and must be disclosed that way. Anything above the cap is a violation on its own.
Everything else beyond government fees and the doc fee is optional. Extended warranties, GAP waivers, paint protection, fabric coating, theft deterrent devices, surface protection products, and debt cancellation agreements are all products you can decline. The dealer cannot condition the sale on your buying them, and cannot add any charge for goods or services without first disclosing it and getting your express consent. If a line item appears that you never agreed to, you can require it be removed before you sign.
What You Must Receive Before You Sign
Before the sales contract goes in front of you, the dealer has to hand you a separate written document listing every optional product being added and its price. That includes service contracts, insurance products, GAP waivers, theft deterrent devices, and surface protection packages. The document has to show two monthly payment figures side by side: what you would pay without the extras, and what you would pay with them.4California Legislative Information. California Civil Code 2982.2 This is the moment to push back on anything you did not ask for, because you sign it before the contract itself.
The sales contract, once you get there, is governed by the Automobile Sales Finance Act. It must carry every federal Truth in Lending disclosure, including the Annual Percentage Rate, the total amount financed, and an itemization of what makes up that financed amount.5California Legislative Information. California Civil Code 2981 – Automobile Sales Finance Act Definitions Charges for service contracts, GAP waivers, theft deterrent devices, surface protection, and debt cancellation must appear as separate line items, and the required consumer notices (do not sign before reading, your right to a filled-in copy, prepayment and default rights, billing error contact) must appear conspicuously in boldface type.6California Legislative Information. California Civil Code 2982
Spot Delivery and Financing That “Falls Through”
Buyers often drive off the lot the day they sign, before the dealer has actually locked in financing with a lender. This is spot delivery, and California requires the dealer to disclose in writing that the sale is conditional and to spell out the conditions that could bring you back.
If the dealer cannot secure financing on the terms in your contract, the deal unwinds. The dealer has to return your trade-in and refund your down payment. The dealer cannot pressure you into signing a new contract at a higher interest rate or with different terms. Using spot delivery to bait you into worse financing violates the Consumer Legal Remedies Act and California’s Unfair Competition Law. If you get the “your financing didn’t go through” call, you are not obligated to accept the revised offer. You can walk away with your trade-in and your money.
There Is No Three-Day Right to Cancel a New Car
California does not give you an automatic cooling-off period on any vehicle purchase. Once you sign the contract and take delivery of a new car, you own it.7California Department of Motor Vehicles. Car Buyer’s Bill of Rights The exceptions are narrow: fraud, or the spot-delivery scenario above where the dealer cannot fund the deal on the original terms.
California does require dealers to offer a Contract Cancellation Option Agreement, but only on used vehicles priced below $40,000. It does not apply to new cars, motorcycles, recreational vehicles, or vehicles bought for business use.8California Legislative Information. California Vehicle Code 11713.21 – Contract Cancellation Option Agreement For a new car, your leverage exists before you sign, not after.
Lemon Law Rights If a New Car Is Defective
The Song-Beverly Consumer Warranty Act is California’s lemon law, and it is the strongest post-purchase protection new car buyers have. If the manufacturer cannot fix a defect covered by the express warranty after a reasonable number of repair attempts, it must either replace the vehicle or give you a full refund. You choose which one. The manufacturer cannot force a replacement on you if you want restitution.9California Legislative Information. California Civil Code 1793.2
When Repair Attempts Are Considered Enough
California creates a rebuttable presumption that the manufacturer has had enough chances to fix the car if any of the following happens within 18 months of delivery or 18,000 miles, whichever comes first:
- The same problem that could cause death or serious injury has been repaired two or more times, and you notified the manufacturer directly at least once.
- The same non-safety problem has been repaired four or more times, and you notified the manufacturer directly at least once.
- The vehicle has been out of service for repairs for a total of more than 30 calendar days since delivery.
The direct-notification requirement only counts against you if the manufacturer clearly disclosed it in the warranty materials or owner’s manual. If it did not, the lack of notice cannot be held against you.10California Legislative Information. California Civil Code 1793.22
What a Successful Claim Gets You
Choose a replacement and the manufacturer must provide a new vehicle substantially identical to yours, including sales tax, registration, and license fees on the replacement. Choose restitution and the manufacturer refunds what you actually paid: purchase price, transportation charges, manufacturer-installed options, sales tax, registration fees, and incidental damages such as towing or rental car costs.9California Legislative Information. California Civil Code 1793.2 The manufacturer can deduct a reasonable amount for the use you got out of the car before the first repair attempt. If the manufacturer willfully refused to comply, a court can award a civil penalty of up to two times your actual damages on top of the refund or replacement.
One point that catches people out: the lemon law obligation belongs to the manufacturer, not the dealer. Your dealership performs the repairs, but the refund or replacement comes from the company that built the car. Keep every repair order, document every service visit, and send any required notifications to the manufacturer’s address listed in the warranty booklet.
The Federal Layer
The Federal Trade Commission also enforces against deceptive auto dealer pricing under its general authority over unfair and deceptive trade practices. In March 2026, the FTC sent warning letters to 97 auto dealer groups identifying illegal tactics that included advertising prices that omit mandatory fees, conditioning an advertised price on the buyer using dealer financing, requiring add-ons not reflected in the advertised price, and advertising vehicles that were not actually available.11Federal Trade Commission. FTC Warns 97 Auto Dealership Groups About Deceptive Pricing California’s advertising rules already cover most of the same ground, so a dealer that games pricing in California faces exposure from both state and federal enforcers.