Berkeley, CA asked in Consumer Law, Contracts and Small Claims for California

Q: Refund of down payment deposit at car dealership in California.

I am in California and paid 1000$ as a deposit to hold the car until I pay the reminder of the down payment. I backed out of purchasing the car. I signed the retail installment sale contract(553) but did not sign a Vehicle Purchase Agreement/Bill of sale nor take deliver of the car. Can I get a refund?

Found the law that would give me a refund:

“Per California Code, Vehicle Code - VEH § 11736, section C: "It is unlawful for any dealer licensed under this article to do any of the following when brokering a retail sale: Fail to refund any purchase money, including purchase deposits, upon demand by a consumer at any time prior to the consumer's signing of a vehicle purchase agreement with a selling dealer and taking delivery of the vehicle described in the brokering agreement.”

But according to the signed documents, in order to cancel the retail installment sale contract I need to pay a restocking fee + purchasing the option to do so which comes up to 750$ (I get 250$ back).

2 Lawyer Answers
James L. Arrasmith
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  • Consumer Law Lawyer
  • Sacramento, CA
  • Licensed in California

A: Under California law, particularly under Vehicle Code Section 11736(c), you are generally entitled to a refund of your deposit before signing a vehicle purchase agreement and taking delivery of the vehicle. However, the specific terms of the retail installment sale contract you signed may complicate this situation, especially if it includes a restocking fee and other cancellation terms.

Since you have signed the retail installment sale contract but not the Vehicle Purchase Agreement or Bill of Sale, and have not taken delivery of the car, you may argue that you are entitled to a refund of your deposit. However, the restocking fee and other charges outlined in your contract could be applicable, reducing the total amount you can reclaim. It's important to review the terms of your contract carefully to understand these charges.

If you believe that the dealership is not complying with California law or the terms of your contract, you might consider speaking with an attorney or contacting a consumer protection agency for further assistance. They can provide guidance based on the specifics of your case and help you understand your rights and options for recovering your deposit, considering the signed agreements and state regulations.

Leon Bayer
Leon Bayer
  • Consumer Law Lawyer
  • Long Beach, CA
  • Licensed in California

A: I think you are entitled to sue the dealer, and file a complaint against the dealer with the DMV.

I believe that what you signed is not allowed to override California Code, Vehicle Code - VEH § 11736.

Small claims court is where you take this to sue.

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