California Auto Dealer Bond

To obtain a California auto dealer license, car dealers must file a $50,000 surety bond with the California Department of Motor Vehicles. Motorcycle, all-terrain vehicle (ATV) dealers, and wholesale-only dealers (selling less than 25 vehicles per year) are required to post a $10,000 bond. The premium typically ranges from 1% to 10% of the bond's total value. Therefore, for a California Auto Dealer Bond, the starting premium is $500 for car dealers and $100 for motorcycle, ATV, and wholesale-only dealers.

The cost of your surety bond is affected by various factors, such as your credit score, the financial standing of your company, your industry experience, and any prior claims on your surety bonds. For an accurate, commitment-free estimate of your bond premium, just fill our online form.

To get your California Auto Dealer Bond, start by filling out our online application form. We'll promptly provide a free, no-commitment quote in response.

Once you've received your quote, the remaining steps are simple: sign the indemnity agreement and pay the quoted premium. After completion, an electronic copy of your surety bond will be sent to you immediately, followed by the original document via mail. After signing it, send this along with the other required documents to the DMV.

Knowing which bond you need is critical. A young entrepreneur, eager to start his motorcycle dealership in California, approached us for an auto dealer bond. He was brimming with questions and a bit anxious about the whole process. As we delved into the details, we learned that he planned to sell fewer than 25 motorcycles a year. We had the unexpected pleasure of informing him that, under California regulations, he wouldn't need an auto dealer bond for such a small-scale operation.

In California, a wide range of professionals in the vehicle dealership industry are required to secure an auto dealer bond before commencing operations. This mandate, as stipulated by the California Department of Motor Vehicles, encompasses various types of dealers including new car dealers, used car dealers, wholesale car dealers, retail car dealers, motorcycle dealers, and all-terrain vehicle dealers. The bond serves as a financial guarantee to protect consumers and ensure compliance with dealer licensing laws.

The bond amount required varies based on the type of dealership. For new and used vehicle dealers, as well as lessor-retailers, a $50,000 bond is necessary. On the other hand, wholesale and motorcycle dealers are required to post a $10,000 bond. However, if a wholesale dealer transacts more than 25 vehicles a year, they must obtain a $50,000 bond. The bond ensures that dealers adhere to legal and ethical standards, protecting purchasers, sellers, financing agencies, and government agencies from monetary losses due to fraudulent or non-compliant dealer practices. It acts as a safeguard, ensuring that dealers fulfill their obligations under the license and compensate any affected parties for financial losses caused by their actions.

Renewing a California Auto Dealer Bond is a crucial step in keeping an active motor vehicle dealer license in the state. Generally, the bond is valid for one year and needs to be renewed prior to its expiration date to prevent any gaps in coverage. The renewal process is simple and can be done online, offering convenience for busy auto dealers. You will receive a renewal notice from us well before your bond's expiration date, which will include detailed instructions and any associated fees for the renewal. It's vital that you respond to this notice promptly to maintain continuous bond coverage and remain in compliance with state regulations.

The California Auto Dealer Bond, a mandatory surety bond stipulated by the California Department of Motor Vehicles, is essential for individuals and entities engaged in the sale, lease, or facilitation of motor vehicle transactions. This bond is a prerequisite for securing a California Auto Dealer License.

Its primary role is to offer protection to consumers, acting as a defense against deceitful or unscrupulous actions by auto dealers. In instances where a dealer partakes in wrongful activities, including misrepresentation, non-payment of necessary taxes and fees, or breaches of licensing regulations, those impacted have the right to make a claim against this bond.