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§3.05 Vehicle Sales—Contract Requirements

Lesson 3:
Vehicle Repairs, Sales, & Leases

Contracts subject to the Rees-Levering Sales Act must be in writing and contain in a single document all of the buyer’s and seller’s agreements as to the total cost and the terms of payment, signed by the buyer and the seller. The seller must furnish a copy to the buyer when they sign it and before the motor vehicle is delivered. [CC §2981.9.]

The contract must contain the following disclosures:

  • Regulation Z: Among many other requirements, Regulation Z (12 CFR Pt 226) requires that disclosures be made clearly and conspicuously; be provided to the prospective buyer before the consummation of the credit sale (to facilitate comparison shopping); and reflect the terms of the proposed contract between the parties. [CC §2982 (as operative July 1, 2012).]
  • Itemization of amount financed: includes cash price, the amount charged for any service contract, the amount of any taxes and fees, and the amount of any insurance premiums. [CC §2982(a)–(c).]
  • Itemization of buyer’s downpayment: brief description of any property being traded in as part of the downpayment. [CC §2982(d).]
  • Persons liable under the contract: names and addresses of all persons to whom certain notices are required to be sent. [CC §2982(e).]
  • Computation of finance charge: identification of the type of finance charge used and the method of computing the unearned finance charge if prepayment in full is made. [CC §2982(f).]
  • Notice to read the contract: notice to the buyer in bold type not to sign the agreement before reading it or if it contains any blank spaces to be filled in, that the buyer is entitled to a completely filled-in copy of the agreement, that the buyer has the right to prepay the full amount due and receive a partial refund of the finance charge, and that the vehicle may be repossessed on default, in which case the buyer might be liable for a deficiency. [CC §2982(g).]
  • Notice to report seller’s unfair practices: notice to the buyer in bold type containing specified language that complaints concerning unfair or deceptive practices or methods by the seller should be first referred to the seller, and if not resolved, then to the city attorney, district attorney, or Department of Motor Vehicles. [CC §2982(h).]
  • Insurance information: an itemization of any insurance included as part of either the amount financed or the finance charge. [CC §2982(i).]
  • Minimum insurance warning: in red bold type, which must be signed or initialed by the buyer, regarding insurance. [CC §2984.1.]
  • New or used vehicle: notice stating whether the vehicle is new or used. [CC §2982(q).]
  • No cooling-off period: notice that there is no cooling-off period, except that sellers of used vehicles with a purchase price of less than $40,000 must offer a two-day contract cancellation period subject to certain statutory conditions. This cancellation option does not apply to the sale of motorcycles, recreational vehicles, or off-highway motor vehicles. [CC §2982(r).]
  • Charging stations:  any charges for electric vehicle charging stations [CC §2982.11, operative July 1, 2013].

Before a conditional sales contract is executed, the seller must also provide, and the buyer must sign, a separate written disclosure that describes and lists the price of each item sold, including items like a service contract, an insurance product, a debt cancellation agreement, a theft deterrent device, a surface protection product, and a cancellation option agreement. [CC §2982.2(a).] But these disclosures do not apply to the sale of specified motorcycles and off-highway vehicles. [CC §2982.2(c).]

Special provisions apply to used car sales:

  • Contract cancellation option. A dealer may not sell a used vehicle at retail to an individual for personal, family, or household use without offering the buyer a contract cancellation option agreement that allows the buyer to return the vehicle without cause. This section does not apply to a used vehicle having a purchase price of $40,000 or more, a motorcycle, or a recreational vehicle. [VC 11713.21(a)(1) (as operative July 1, 2012).]

  • Used car history report. A dealer may not display or offer for sale at retail a used vehicle subject to registration unless the dealer first obtains a NMVTIS (National Motor Vehicle Title Information System) vehicle history report. [VC 11713.26(a) (as operative July 1, 2012).]

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