California Auto Dealer Bond

Sun, sand surf, and mountains, the Golden State is known worldwide for its beautiful climate and sceneries. As the largest state by population, California is the home of the largest number of motor vehicle dealers. However, the state has strict laws regulating the automotive industry. Under the California Code of Regulations, Title 13, Chapter 1, any person who sells more than five vehicles for profit in California must obtain the relevant auto dealer license from the California Department of Motor Vehicles,Occupational Licensing. In order to obtain the license, you need a California motor vehicle surety bond based on the Section 11710 of the Vehicle Code. The most common bond is a $50,000 motor vehicle dealer bond, which starts at $300 per year. If you're a wholesaler, then you will need a $10k wholesale dealer bond. Either way, get started with our three minute quote flow below.

Overview

  • Who Needs It: all new dealers, used dealers, public consignment auction dealers, parts recyclers, and wholesalers need the bond
  • Bond Amount: $50,000 bond for all retail car dealers; $10,000 for wholesale dealers and retail dealers who only sell motorcycles and all terrain vehicles
  • Cost: Starts at $100 for one year, dependent on the applicant’s credit score

You can click on the “Quote” button below to obtain your CA Auto Dealer Bond quote. 

Sample California Auto Dealer Bond Form
Sample California Auto Dealer Bond Form
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Commonly Asked Questions: 

What Are the Different Types of California Motor Vehicle Dealer Bond? 

  • Retail Dealers (Most Common): $50,000 bond
  • Wholesale-Only Dealers If you sell more than 25 vehicles to other licensed dealers: $50,000 bond
  • Wholesale-Only Dealers who sells less than 25 vehicles to other licensed dealers: $10,000 bond
  • Motorcycle / All Terrain Dealers: $10,000 bond 

If My Dealership Wants to Run More Than One Type of Operations, Do I Need More Than One Bond? 

No, you only need one bond for multiple operations. You would need the bond with a larger sum. For example, if you sell both motorcycles and used motor vehicle dealers to regular citizens (not licensed dealers), then you simply need to purchase the $50,000 since it is the higher coverage one compared to the $10,000 motorcycle bond. 

If My Dealership Has Multiple Locations, How Many Bonds Do I Need? 

You only need one bond for as many locations as you have. For example, a used dealership with one location needs the same one $50,000 bond as a dealership with 10 different locations. 

What Is the Purpose of the California Auto Dealer Bond? 

The bond is used to protect the California consumers from the potential fraudulent acts of unscrupulous bonded auto dealers. Some of the unethical acts include the following: 

  • Intentionally hide issues of a vehicle before a sale
  • Don’t own the titles of the vehicles you are selling 
  • Forget to transfer the titles of the vehicles to the customer after sale
  • Fail to pay all relevant taxes related to operating your dealership

If any of the unethical practices above exist, a customer can file a claim against the bond

What is the Bond Term?

The CA Auto Dealer Bond needs to have its bond term consistent with the CA Auto Dealer License. Since the CA Auto Dealer License is renewed on an annual basis, the bond typically is only for a one-year term and renewed annually. 

What Information Is Required on Your Bond Form?

  • Principal Name and DBA
  • Dealer Service Address
  • Surety Name
  • State of Incorporation of the Surety Name
  • Surety Service Name
  • Bond Effective Date
  • Bond Execution Location 
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How to Ensure Your Bond is Accepted by the DMV

To ensure your bond is accepted by the DMV, you can do a few things: 

  • Only choose licensed bonding companies with lots of good google reviews 
  • Once you receive the bond, make sure you double check the bond form and ensure it is consistent with the California DMV bond form (a picture is attached above)
  • Make sure all blank fields are filled out. Make sure the Attorney-In-Fact of the Surety Company sign on the appropriate field 
  • Make sure the Surety Seal is next to the signature of the Attorney-In-Fact
  • Make sure a Power of Attorney is attached to the bond 

How To Get the Best Price for a Bond

Credit score is the most important determinant of the bond price that you can actually control. Having a great credit score can lower the price of your bond significantly. There are a few things you can do to improve your credit score

  • Pay credit card balances
  • Ask for higher credit limit
  • Become an authorized user
  • Pay bills on time
  • If there is a credit report error, make sure to dispute it to preserve your credit

How Fast Can I Obtain the CA Motor Vehicle Dealer Bond?

Given that the state DMV accepts electronic versions of the bond, you can receive the bond within 30 minutes after bond purchase. We will email a fully signed bond to your email inbox. All you need to do is sign your bond and then submit to the CA DMV. 

How to Submit the CA Motor Vehicle Dealer Bond?

Even though the Occupational Licensing Branch of the Licensing Operations Division of the CA DMV has its address clearly indicated on the top left of the bond form, you should submit your bond electronically through the Occupational Licensing Login

At What Step In the Application Process Can I Get a Bond? 

There are many steps in the application process for a CA Auto Dealer License. We have defined the specific steps below where obtaining a dealer bond is step 13. However, to obtain a really good rate for your dealer bond, you can also obtain it as soon as you have a business name. All we need in order to secure you a rate for your bond is your own social security number and a valid name of the dealership. The sooner you lock down an affordable bond rate, the more peace of mind you have. 

Will I Get a Hardcopy of the Bond? 

A hardcopy of your bond is not required for your CA Auto Dealer Bond application. The bond we email you is the final bond with electronic signature and digital seal. All you need is print out the bond we emailed you and submit the bond we emailed you to the Occupational Licensing Branch of the Licensing Operations Division of the CA DMV

How to Get a CA Motor Vehicle Dealer License?

Step 1: Determine the Type of Motor Vehicle Dealer License You Need 

  • Decide among New Dealer License, Used Dealer License, Wholesale-Only License and Autobroker’s Endorsement

Step 2: Complete a 6 Hour Pre-Licensing Training Course

  • A 6-hour pre-licensing training course focuses on laws and regulations of the CA Auto Industry and explains the steps it takes to become a licensed CA Auto Dealer
  • You can take the courses among many providers, including Dealer 101, Dealer Training, Redline Dealer Education

Step 3: Pass the Dealer License Test at Your Nearest DMV Licensing Office 

  • Pass a 40 multiple-choice-question exam. Scoring correctly 28 out of the 40 questions would mean a passing grade

Step 4: Determine Your Business Corporate Structure 

  • Corporation 
  • Limited Liability Corp (LLC)
  • Sole Proprietorship
  • Partnership 

Step 5: Set Up Your Business Corporate Structure and Complete the Required Documents  

Step 6: Obtain Your Federal Employer Identification Number (FEIN)

  • You can apply for a federal employer identification number on the official IRS website

Step 7: Apply for a Business Bank Account

Step 8: Obtain Seller’s Permit from the California Department of Tax & Fee Administration

Step 9: Register with the California Secretary of State or County

  • You can use online filing services like Biz File online who can handle the registration and filing process for you

Step 10: Find a Dealership Location and Display Lot 

  • There are many requirements that the dealership location and display lot need to fulfill. For details, please check out our dealer license page 

Step 11: Install a sign 

  • A sign of 2x2 with business name, address and hours of operations is required to be posted outside of your office 

Step 12: City Business License

  • If you are located in certain cities and towns, you may need to obtain a Business License

Step 13: Obtain a Dealer Surety Bond

Step 14: Submit Application Through the Online Form

  • Complete the correct auto dealer application from the California DMV website

Step 15: Complete Live Scan Fingerprinting 

Step 16: Schedule and Accommodate a Site Visit by the DMV Inspector 

  • Schedule the inspection of your dealership location

Step 17: Receive your approved application in your mail. Now time to celebrate!

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