Home News 

Story

State Senate Approves Used Car Lemon Law

Posted: 3:31 pm PDT July 7, 2005

Used car buyers could purchase the right to return vehicles for a refund under compromise legislation approved Thursday by the state Senate.

The bill would also set standards for certified used cars, limit interest rates on loans arranged by dealers and require disclosure of financing costs for extras such as fabric protection and extended service deals.

The measure was negotiated by car dealers and consumer advocates, but the author, Assemblywoman Cindy Montanez, D-San Fernando, said it was still the strongest consumer protection measure for used car buyers in the nation.

"I am gratified that my colleagues in the Senate recognize the need to protect the millions of car buyers in our state from the underhanded dealing of some car salesmen who take advantage of the vulnerable and unsuspecting," she said in a statement.

Sen. John Campbell, an Irvine Republican and a former auto dealer, said honest dealers already follow many of the requirements in the bill.

"This is a good balance between curbing the excess of those in this industry who are not operating with good business practices without unfairly restricting the ability of good operators to do what they do," he said.

Under the bill, buyers could purchase a contract cancellation option from a dealer that would allow them to return the car for a refund within two days.

The price of the contract would range from a maximum of $75 for a vehicle costing up to $5,000 to no more than 1 percent of the purchase price for a $30,000 to $40,000 car.

Cars priced above $40,000 wouldn't be eligible in order to prevent people from buying expensive cars just to drive them for a couple of days.

Motorcycles and recreational and off-road vehicles and sales by individuals also wouldn't be covered.

Vehicles could be driven no more than 250 miles after leaving the showroom and would have to be returned undamaged to qualify for refunds.

Dealers could also charge restocking fees ranging from $175 to $500 depending on the purchase price.

Current law includes some disclosure requirements for dealers but doesn't provide for any kind of reconsideration period for used car buyers.

The bill also would bar a dealer from giving certified status to used cars if the odometer had been rolled back, it had been repurchased under a warranty requirement or "lemon law," or if the vehicle had been damaged enough to impair its use or make it unsafe.

Another provision would allow dealers to add no more than 2.5 percent to the interest rate on cars loans they arrange for customers.

A 35-3 vote sent the bill back to the Assembly, which approved a somewhat different version in May. Final approval there would send the bill to Gov. Arnold Schwarzenegger, who vetoed a similar measure last year but hasn't taken a position on this bill.

More Headlines

KTVU Channel 2 News At 5

new_ktvu_logo
KTVU Channel 2 News at 5 has more important details of the Bay Area's Major News. Coverage that's straightforward and complete on KTVU Channel 2 News at 5.

Desktop Alert

Desktop Alert

* Breaking News Alerts
* Severe Weather Alerts
* Click here to download!