California's New Car Buying Law Bans Hidden Feesfotog - Getty ImagesBuying a new car should be fun, but as many can attest, it's often fraught with opportunities to be scammed. And not just by that shady used car salesman at the corner lot. Often the cheats are legitimate dealers. You agree to a price only to find hundreds or thousands tacked on when you sign.A new law that just took effect in California hopes to stymie those bad actors with a sweeping new law that requires much more price transparency, with tighter rules on dealer add-ons and, for many used vehicles, a three-day cancellation period.The California Combating Auto Retail Scams (CARS) Act applies to both new and used vehicles sold by licensed dealers. Dealers must now clearly disclose the total advertised price upfront, cannot charge for add-on products that provide no meaningful benefit (good-bye window etching!), and must give buyers of used vehicles priced at $50,000 or less three calendar days to cancel the purchase for any reason, subject to mileage limits and a small restocking fee.Proponents of the new law say the it tackles some of the biggest complaints about buying a vehicle: hidden fees, confusing pricing, and high-pressure sales tactics. California officials say the new law should save consumers hundreds of millions of dollars annually through improved pricing transparency and lower transaction costs.Mario Tama - Getty ImagesSeveral states already regulate some aspects of dealer advertising or require disclosures for finance products, but California's new law is widely seen as the most comprehensive set of protections aimed specifically at retail auto sales in the country. It also goes further than the Federal Trade Commission's proposed CARS Rule, which was struck down in federal court before it could take effect.And some other states require limited cancellation rights in certain transactions, but California's automatic three-day cancellation option for qualifying used vehicles purchased from dealerships is among the broadest consumer protections of its kind.Whether other states follow California's lead remains to be seen, the appeal is obvious. A vehicle purchase is often the second-largest household expense after a home. Requiring all-in pricing from the outset should also make comparison shopping easier, while stronger rules governing optional products such as service contracts, GAP coverage, and theft protection could reduce unexpected costs at signing.Opponents (read: car dealers) have tried to argue that the additional requirements increase paperwork and complexity, though it's hard to imagine how disclosing the bottom line at the outset adds more work. Supporters say greater transparency ultimately benefits both consumers and dealerships and builds trust in the sales process.As with California's emissions standards and zero-emission vehicle mandates, the new CARS Act could become another example of the state influencing automotive policy beyond its borders if other states decide the added consumer protections are worth adopting.
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