Why Does the California DMV require a Motor Vehicle Dealer Surety Bond?
California Motor Vehicle Dealer Surety Bonds, (also known as a California Auto Dealer Bond), are required by the California Department of Motor Vehicles for auto dealers conducting business in the state. The bond amounts vary and are dependent on the type of license required:
- Motorcycle dealers, motorcycle lessor-retailers, ATV dealers and wholesale-only dealers (Less than 25 vehicles per year) require a $10,000 surety bond
- New/Used motor vehicle dealers (25 or more vehicles per year) require a $50,000 surety bond.
What Is The Process To Get A California Motor Vehicle Dealer License?
Anyone who wishes to become a motor vehicle dealer must submit a completed application and all applicable fees to the California Department of Motor Vehicles, and provide the following forms:
- OL 12 Application for Original Occupational License
- OL 21A Original Application for Occupational License
- 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
The following documents are also required:
- Evidence of successful completion of the Vehicle Dealer Written Examination
- Original Dealer Education Certificate of Completion
- If filing as a Corporation –Statement of Information (SI 550)
- If filing as a Limited Liability Company – Statement of Information LLC (LLC 12)
- 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 Boar of Equalization Resale Permit
- Photographs of business location
How Does A California Motor Vehicle Dealer Surety Bond Work?
California Motor Vehicle Dealer Surety Bonds guarantee that the principal (vehicle dealer) complies with all applicable laws and regulations, including those established by the California Department of Motor Vehicles and the California Vehicle Code.
This bond also protects purchasers, sellers, finance agencies or government agencies from fraud or fraudulent representations committed by the principal in the course of business. If the principal does not comply with the terms of the bond, a claim can be filed with the surety company. If the claim is valid, the surety will pay up to the penal sum of the bond to resolve the claim. The principal is then required to reimburse the surety for all monies paid out, including any attorney fees incurred.
What Are The Terms Of A California Motor Vehicle Dealer Surety Bond?
California Motor Vehicle Dealer Surety Bonds are filed with the California Department of Motor Vehicles and renew on an annual basis for as long as the dealer continues operating in the state. The bond term is continuous and remains in full force and effect until canceled. It shall run concurrently with the principal’s license.
The surety can cancel the bond at anytime by providing a 30-day written notice to the DMV prior to the effective cancellation date. The aggregate liability of the surety will not exceed the penal sum of the bond in any event.
How Do I Get A California Motor Vehicle Dealer Surety Bond?
Your first step is to complete our quick online application for your free bond quote. Submission takes only five minutes, and one of our underwriting staff will be in contact with you within a couple of hours with your pricing.
After you receive approval, you will sign an indemnity agreement with the surety and provide payment for your bond premium. In most cases, we can issue bonds the same day as we receive your signed documents and payment.
How Much Does A California Auto Dealer Bond Cost?
The California Auto Dealer Bond is subject to underwriting and the price you will pay depends on a review of your personal credit report. Pricing for the $50,000 bond can range from $400 to over $5,000, while the $10,000 bond can range from $100 to over $900. It typically takes just a few hours from quote to issuance of the auto dealer bond, and we have the ability to beat any competitors pricing.
Can I get a California Auto Dealer Bond With Bad Credit?
Pacific Surety offers a wide-range of approvals, regardless of credit, for California Motor Vehicle Dealer Surety Bonds. Our strong surety relationships help get your price down as low as possible each year. There is no need to shop your rate – we do that for you!
If you have any specific questions, feel free to contact our knowledgeable underwriting staff.
- California Department of Motor Vehicles – Occupational Licensing
- New Dealer Application Checklist
- New Dealer Application Forms Packet
- California Vehicle Code – Division 5, Chapter 4, Article 1, Section 11711
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