Motor Vehicle Dealer Bond – California
The motor vehicle dealer bond is required to be a licensed car dealer in California. There are four types of auto dealer bonds available: the $50,000 Franchise dealer Bond, the $50,000 used/wholesale dealer bond, the $10,000 wholesale dealer bond, and the $10,000 motorcycle dealer bond.
We work with several major insurance carriers to deliver the lowest bond price every time with no paperwork in seconds. Surety bonds need to be filed with the dealer’s inspector to comply with the California DMV Occupational License Division.
How Much Does a Motor Vehicle Dealer Bond Cost in California?
Motor vehicle dealer bond costs depend on the type of dealer, personal credit, years in business, and several other factors. At Jet, prices range anywhere from $89 up to $6,000, but we would never charge that much.
|Price Tier*||Used & Wholesale
24 Cars or Less
|Franchise / New
|Monthly | Annual||Monthly | Annual||Monthly | Annual||Monthly | Annual|
|Preferred||$33 | $369||$9 | $89||$33 | $369||$9 | $89|
|Standard||$62 | $699||$17 | $175||$41 | $469||$17 | $175|
|Credit Repair||$135 | $1379||$37 | $375||$47 | $500||$37 | $375|
*Prices shown are based on several factors including, but not limited to, personal credit, license history, years in business and active licensing and bonding. Not all available pricing tiers are shown. Rates do not constitute an offer of bonding and are subject to change at any time.
Used car dealers and wholesale dealers who transact 25 cars or more a year have a required auto dealer bond limit of $50,000. The cost starts at $33 monthly or $369 if paid in full annually.
Franchise (new) car dealers are also required to carry a $50,000 dealer bond. Bond prices for new auto dealers can be as low as used dealer $33 monthly or $369 annually.
For all motorcycle only dealers and wholesale car dealers who transact 24 cars or less the bond limit is $10,000; because this is a lower bond limit than other dealer types, this leads to lower premiums. The bond prices start at $9 monthly or $89 annually if paid in full up front.
How Do I Apply for a California Car Dealer Bond and How Fast Can I Get One?
The process of applying and purchasing a motor vehicle dealer bond can be done in under one minute by clicking the appropriate dealer type button below. Simply follow the few instructions, receive your quote and purchase immediately. If your inspector is waiting for the bond now, print the bond after purchase and hand it to them.
*Scroll left and right
|Applications for California Car Dealers|
|Used Auto Dealer / Wholesale Dealer Bond|
|Wholesale Car Dealer who transacts 24 cars or less|
|Franchise Motor Vehicle Dealer|
|Motorcycle Only Dealer|
|Vehicle Registration Bond|
Why Is the Motor Vehicle Dealer Bond Required?
The motor vehicle bond is a requirement put in place by the California State Legislature and enforced by the CA DMV Occupational Division to protect others from auto dealers. Should an infraction occur the auto dealer bond covers the claimant up to the dollar limit of the bond.
Who does need protection from dealers? First, a consumer is protected from any loss caused by fraud and failure to transfer registration. The bond is also security for a person who is not paid for a vehicle sold to a licensed dealer. Lastly, the state of California is guarded from fraud, registration, and tax and fee violations committed by the dealer. You can review Section 11711 of the California Vehicle Code to read more.
What to Do If a Claim Is Filed on Your Bond?
California motor vehicle dealer bonds must be issued by an insurance carrier admitted by the California Department of Insurance. The insurance company issuing any surety bond, such as the California auto dealer bond, is also often referred to as the “surety company” or the “bond company”. The car dealer business is referred to as the “Principal” and is the party the bond protects against. The State of California Department of Motor Vehicles is the Obligee and represents the protected party which can be the State and/or the consumer.
Without the requirement, one can assume most dealers would not purchase the bond, especially those who would perform the fraudulent activities the bond is there to safeguard against. The most common violations motor vehicle dealers need to be aware of are bounced checks at auction or failing to deliver the title to a customer.
The surety company files the car dealer bond with the Occupational License Division of the CA DMV. The bond is a guarantee that payment for financial damages would be paid out should any violation of license law occur by the licensed auto dealer against the state, customers, vendors, and employees up to the penalty limit of the bond. It is the responsibility of the surety company to determine the validity of the claim. Claims can come directly from the public and the state.
Should a claim occur and be paid out, the licensed dealer is required to reimburse the surety company. This is unlike insurance, which pays out claims and does not require the insured to pay them back. A dealer who does not reimburse the surety company faces a suspension against their license.