CA Motor Vehicle Dealer License Bond
Auto dealerships in California are required to get an auto dealer license to operate in the state. Part of the pre-licensing requirements set by the California Department of Motor Vehicles (DMV) is to get a surety bond.
How do California motor vehicle dealer bonds work
California auto dealer bonds protect the state and consumers against the fraudulent and unethical practices of auto dealers. When a dealer gets their license they agree to comply with the rules established by the California Department of Motor Vehicles (DMV) and the California Vehicle Code.
If an auto dealership does not follow the regulations, a claim can be made against the bond. In the event of a successful claim, the surety company will pay the damaged party up to the total bond amount. The principal is then responsible for reimbursing the surety company.
Types of California auto dealers
California distinguishes between motor vehicle dealers based on the type of vehicles they sell. These distinctions determine the type and size of the bond that you need:
- New vehicle dealers
- Used vehicle dealers
- Wholesale only dealers
- Motorcycle dealers
- All-terrain vehicles (ATV) dealers
How much does a California car dealer bond cost?
The required bond amount for California auto dealer bonds depends on the specific type of dealer license.
Motorcycle dealers, motorcycle lessor-retailers, ATV dealers, and wholesale-only dealers (selling less than 25 vehicles per year) require a $10,000 surety bond.
New motor vehicle dealers selling more than 25 vehicles a year require a $50,000 surety bond.
Auto dealers need to pay a percentage of the total bond amount as a premium to get the bond. The cost for a California auto dealer bond typically ranges from 1% to 5%. Dealers with excellent credit and industry experience can pay as little as:
- $400 for a one-year or $700 for a two-year $50,000 bond
- $100 for a one-year $10,000 bond
How do you get a California auto dealer license?
To become a licensed auto dealer in California, you must meet the DMV licensing requirements, pay all application fees, and complete the following forms:
- Application for Original Occupational License (OL 12)
- Original Application for Occupational License (OL 21A)
- OL 25 Surety Bond of Dealer or OL 25B Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer, or Wholesale-Only Dealer
- OL 53 Authorization To Release Financial Information
- Certificate of Proposed Franchise (OL 124)
- OL 29B Application for Occupational License Personal History Questionnaire
- ADM 9050 Appointment of Director as Agent for Service of Process
- DMV 8016 Request for Live Scan Service
You will also need to provide the following supporting documents along with your application:
- Evidence of successful completion of the Vehicle Dealer Written Examination
- Original Dealer Education Certificate of Completion
- Fictitious Name Statement
- Signed copy of your rental or lease agreement
- Copy of Business License, Certificate of Occupancy License or Tax Certificate
- Copy of State Board of Equalization Resale Permit
- Photographs of business location
How Do I Get a California Auto Dealer Bond?
To get a California auto dealer bond, you need to complete a brief online application. After your application is received, we will send you a free quote and instructions for completing the process.
Obligee Information
California Department of Motor Vehicles, Licensing Operations Division
Occupational Licensing Branch
PO Box 932342
Sacramento, California 94232
Phone: 1-800-777-0133
If you prefer to fill out a pdf application, please email your request to apps@www.southcoastsurety.com.