California's CARS Act: what changed on October 1, 2026, and where the credit application fits

In short: California's CARS Act has been in effect since October 1. Here's what changed, and why your credit application is part of it.

California's Combating Auto Retail Scams (CARS) Act, SB 766, was signed on October 6, 2025 and became operative on October 1, 2026. It adds new sections to the California Civil Code and makes conforming changes to the Vehicle Code. It is a California law for California dealers, though many topics will look familiar from FTC guidance.

Who is covered

The law applies to licensed California dealers. The DMV's implementation memo (OLIN 2026-10) describes coverage as retail sales or leases of light-duty vehicles under 10,000 pounds, with exemptions such as wholesale, fleet, and auction sales.

Misrepresentations (Civil Code section 1784.40)

Dealers may not misrepresent a list of material facts. The list includes the costs or terms of purchasing, financing, or leasing; add-ons; whether a consumer has been or will be preapproved or guaranteed for any product, service, or term; and information on or about a consumer's application for financing. That last item puts the credit application itself squarely inside the statute.

Total price (section 1784.41)

The total price must be clearly and conspicuously disclosed in any advertisement that references a specific vehicle or states a monetary amount or financing term, and in the first written communication with a consumer that references a specific vehicle for sale or any monetary amount or financing term for any vehicle. Dealers must keep a copy of that communication for at least two years. The DMV memo lists email, text message, quote, and credit application as examples of first written communications. The statute defines total price as the total sale price excluding the taxes, fees, and charges described in Vehicle Code section 11713.1(e), including dealer price adjustments and installed items, with no deduction for rebates.

Add-ons (sections 1784.41 and 1784.42)

When making a written representation about an add-on during negotiation, dealers must disclose in writing, at least once, that the add-on is not required and the vehicle can be bought or leased without it. The DMV memo says the optional nature must be disclosed both verbally and in writing in at least 12-point type. Dealers may not charge for add-ons that provide no benefit to the consumer. The statute gives examples, including oil changes for electric vehicles and nitrogen tire products with less than 95 percent nitrogen purity.

3-day right to cancel (section 1784.43)

For many used vehicles priced at $50,000 or less, consumers get a 3-day right to cancel, subject to mileage and condition limits and a separate titled disclosure. It replaces the prior optional contract cancellation agreement.

Records (section 1784.44)

Dealers must keep specified records for two years, including advertisements, pricing communications, deal documents, add-on documentation, and cancellation records.

Practical takeaways

1. Map every point where a California customer first receives something in writing about a specific vehicle, including the credit application, and confirm the total price appears there.
2. Review what staff tell customers about preapproval, approval odds, and the status of their application, and keep those statements accurate.
3. Build a written "add-ons are optional" disclosure into your deal flow and keep it in the file.
4. Audit your add-on menu against the no-benefit examples in section 1784.42.
5. Set a two-year retention schedule for ads, first communications, deal files, and cancellation records.

This explainer is general information about a California statute, not legal advice. California law is complex and this summary is not complete. Talk to your counsel about how SB 766 applies to your store.

Sources: SB 766 bill text, California Legislative Information; California DMV, OLIN 2026-10 (PDF).