What is a California Deferred Deposit Originator Bond?
Deferred deposit transactions, also known as payday loans, are loans where the borrower writes a personal check to the lender, with the understanding that the lender will not cash the check until a specified date.
The lender keeps an agreed-upon fee, and the borrower receives the cash advance.
A California deferred deposit originator bond is required for the lending company to receive the licensing to operate.
Who Needs a California Deferred Deposit Originator Bond?
In California, companies who wish to offer deferred deposit transactions are called deferred deposit originators, which is defined as anyone who offers, originates, or makes a deferred deposit transaction. They must receive licensing by the Commissioner of Corporations of the State of California, and to receive this licensing, the principal must first purchase a California deferred deposit originator bond.
Why Do I Need a California Deferred Deposit Originator Bond?
California deferred deposit originator bonds ensure that the principal (or deferred deposit originator) pledges to conduct business by the California Deferred Deposit Transaction Law (CDDTL) and all rules and regulations made by the Commissioner of Corporations of the State of California. Most importantly, this bond guarantees that the state or any other individual will receive any money due from the lending company. The principal also agrees to only conduct business at the place of business as listed on the license.
How Much Does a California Deferred Deposit Originator Bond Cost?
The California Department of Corporations requires surety bonds in varying amounts, which is decided by the department. Therefore, the cost of a California deferred deposit originator bond varies on a case-by-case basis. Applicants should first contact the California Department of Corporations for the required amount.
Additionally, California deposit originator bonds are subject to underwriting, which means the premium associated with the bond will vary depending on the credit score of the business owners.
Get Started Today!
To receive your licensing as a deferred deposit originator, you must first purchase a California deferred deposit originator bond. Don’t delay your application.