Quick answer
California lets a dealer defer part of your down payment, sometimes called a "pick payment," but only until the due date of your second regular installment, without a finance charge, and only if the contract shows the deferred amount and it appears in the payment schedule.
Key takeaways
- A deferred down payment must be listed separately in your contract.
- It can't be due later than your second regular monthly payment.
- It can't carry a finance charge.
- It must appear in the payment schedule in your contract's federal Truth in Lending disclosures.
- Missing a deferred payment can be treated as a default, so know the due dates.
What a deferred down payment is
When you don't have the full down payment at signing, a dealer may let you pay part of it later. Dealers sometimes call these "pick payments." California's Automobile Sales Finance Act allows this, but with limits.
The rules in California
- The contract must itemize the amount of the down payment being deferred (Civil Code § 2982(a)).
- The deferred amount can't be due later than the due date of the second regularly scheduled installment.
- No finance charge can be added to the deferred amount.
- The deferred payment must be reflected in the payment schedule disclosed under the federal Truth in Lending Act (Regulation Z) (Civil Code § 2982(c)).
Red flags
- Pick payments due months after the sale, or after your second regular payment.
- A deferred amount that isn't written in the contract, or a separate side agreement or promissory note.
- Extra fees or interest charged on the deferred amount.
- A dealer threatening repossession over a pick payment you were never told about in writing.
What to do next
- Find the itemization of the down payment in your contract and look for a deferred amount.
- Compare the due dates in the payment schedule with what the dealer told you.
- Keep receipts for every pick payment you make.
- Request a free case review if the terms don't match the rules above.
Frequently asked questions
Sources
- California Civil Code § 2982 (contract disclosures, including deferred downpayment)
- California Civil Code § 1770 (Consumers Legal Remedies Act: prohibited practices)
This website provides general information, not legal advice. Laws change and every situation is different. Talk to a licensed attorney in your state about your specific facts.
More on this topic: California car buyer rights & dealer fraud overview