California DMV Dealer Surety Bonds Explained

All car dealers in California have to be licensed and to become licensed all dealers must post a surety bond. The definition of a dealer is explained in section 285 of the California Vehicle Dealer Code and is:

• For commission, money, or other thing of value, sells, exchanges, buys or offers for sale, negotiates or attempts to negotiate, a sale or exchange of an interest in a vehicle subject to registration or a motorcycle, snowmobile, subject to identification under this code, or induces or attempts to induce any person to buy or exchange an interest in a vehicle and, who receives or expects to receive a commission, money brokerage fees, profit, or any other thing of value, from either the seller or purchaser of said vehicle; or
• Is engaged wholly or in part in the business of selling vehicles or buying or taking in trade, vehicles for the purpose of resale, selling, or offering for sale, or consigned to be sold, or otherwise dealing in vehicles, whether or not such vehicles are owned by the person.

The state has 4 separate classifications for dealers that are required to post a $50,000 surety bond as part of the licensing process.  They are:

• New/Used Auto-Commercial – Authorized to sell new/used automobiles and trucks to the public and licensed vehicle dealers. 
• Used Auto – Commercial  – Authorized to sell used automobiles and trucks to the public and licensed vehicle dealers. 
  
• Dealer-Wholesale Only – Authorized to sell to licensed vehicle dealers only. 
• Autobroker – Provides the service of arranging, negotiating, assisting, or effectuating, for a fee or compensation, the purchase of a new or used vehicle, not owned by the dealer, for a person(s).    

A surety bond in the amount of $10,00 is required of Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer, or Wholesale-Only Dealer selling Less Than 25 Vehicles Per Year.

Surety1 has great rates and easy, on-line application for all  DMV Dealer bonds. To Apply for a dealer bond, click HERE .

California’s Surety Bond Agency