California auto dealer bond does not protect the used car dealer from lawsuits, but it protects the consumer from fraud or misrepresentation by the car dealer. Auto Dealer Bond guarantee compliance with state laws and every state sets its own bond amount, period and expiration date.
All auto dealers in California are licensed through the California Department of Motor Vehicles. There are two different applications for new dealers and all other types of dealers, but application packages and checklists for both are readily available. A background check will be run for every applicant.
To Obtain a California Auto Dealer Bond
- The bond cost start from $500/year and up depending on your personal credit history.
- obtain a free bond quote for your auto dealer license.
- All California auto dealers must purchase a $50,000 surety bond to get licensed.
- All CA auto bonds are issued on the same day
To Find out What Type of License You Need:
- New or Used Commercial Auto Dealer: This license permits you to sell new or used cars and trucks to the public, as well as to licensed vehicle dealers
- Used Auto Dealer: This license permits you to sell only used cars and trucks to the public and to licensed vehicle dealers
- Wholesale Dealer: This license permits you to sell only to licensed vehicle dealers
- Auto broker: This license allows you to provide the service of arranging, negotiating, and otherwise assisting in the purchase of a new or used vehicle for an individual in exchange for compensation.
You can apply for an additional auto broker endorsement with any of the first three license types.
Attend a Dealer Training Program
If you are applying for a used vehicle dealer or wholesale dealer license, you must attend a 6-hour pre-licensing training program and pass a test consisting of 40 questions.
Obtain a Permanent Business Location
Depending on your type of license, you will need to:
- Obtain zoning and property use verification to ensure the business location is compliant with regulations.
- Include an office with direct entry from the outside, fitted with a desk, filing cabinet and telephone, holding all records related to your business
- Display a sign at a minimum of 2 square feet that meets all CVC guidelines and the CA Code of Regulations
- Meet the minimum display area size requirements outlined in the CVC auto dealer handbook
Note: Make sure to read through the full requirements to learn which location requirements apply to your business.
Once you have a business location, you should take photographs of the location, which you will need to send in with your application. Based on the type of license you are applying for, different photographs will be required.
Obtain Licenses and Permits
The licenses and permits you need to acquire are:
- Board of Equalization Resale Permit
- Board of Equalization Seller’s Permit
- City and/or County Business License
- Fictitious Occupational License: For businesses that operate under a name other than the actual name of the owner
Note: If you are offering repair services, you will have to apply with your local Bureau of Automotive Repair.
Arrange a Place of Business Inspection
You are required to arrange an appointment with an Occupational Licensing inspector. The inspector will inspect your place of business, including the office, the books and records, the display area and the signs. For further details on the exact procedure, visit the DMV’s website.
Bond Amount Required:
- $50,000 for Dealers (form OL 25)
- $10,000 for Motorcycle Dealers, Motorcycle Lessor-Retailers, All-Terrain Vehicle Dealers, or Wholesale-Only Dealer (less than 25 vehicles per year) (form OL 25B)