What is a California Motor Vehicle Dealer Bond?
Car, motorcycle, and ATV dealers in California must be fully licensed by the California Department of Motor Vehicles. To receive that licensing, they are required to post a motor vehicle dealer bond.
Who Needs a California Motor Vehicle Dealer Bond?
Any motor vehicle dealer or lessor, including those who work with automobiles, motorcycles, ATVs, and wholesale-only sales, are required by the Department of Motor Vehicles to maintain a motor vehicle dealer bond. The surety bond amount for vehicle dealers is $50,000, except for motorcycle, ATV, or wholesale-only dealers who sell less than 25 vehicles per year. In that case, a $10,000 surety bond is necessary.
Why Do I Need a California Motor Vehicle Dealer Bond?
The California motor vehicle dealer bond is designed to protect purchasers, sellers, financing agencies, and governmental agencies from monetary losses as a result of fraud or fraudulent representation by the vehicle dealer. If an individual, group of individuals, or agency suffers financial loss due to a violation of the Vehicle Code (Section 11711), the harmed can file a claim against the surety bond. The principal is then liable for any damages paid or legal fees incurred by the surety.
How Much Does a California Motor Vehicle Dealer Bond Cost?
For most motor vehicle dealers, the California DMV requires a surety bond of $50,000, although there are exceptions for motorcycle and ATV dealers who sell less than 25 vehicles per year.
California motor vehicle dealer bonds are subject to underwriting. Therefore the cost of the surety bond will vary depending on the credit rating of the principal. In addition to the credit history, some surety underwriting companies will also require accurate information, including the dealer’s license number and the length of time that the dealer has been in business.
Get Started Today!
To establish a motor vehicle dealership, you must first purchase a California motor vehicle dealer bond. Don’t delay your application.