How to Get a California Auto Dealer License

How to get a California Auto Dealer License

Before legally conducting business, all California auto dealers must be licensed by the state’s Department of Motor Vehicles, as well as the city/county office that regulates local business registration. To make the process easier, SuretyBonds.com has developed this quick, easy guide that outlines the California auto dealer license and bond requirements.

How to get a California auto dealer license

Whether you’re a new or existing dealer, you are required to hold a dealer license if you wish to sell new or used vehicles. Applicants can take advantage of the New Dealer Application Checklist and Used Dealer or Dealer Wholesale Only Application Checklist when completing a dealer license application.

If applying to deal new vehicles, you must:

If applying to deal used vehicles (dealer-wholesale only), you must:

Both packet forms include the following documents that must be completed:

  • Application for original occupational license
  • Surety bond on the prescribed form in the required amount
    • Instructions for the surety bond can be found on page 7
  • Deposit agreement and assignment
  • Addendum to the deposit agreement
  • Personal history questionnaire
  • Authorization to release financial information
  • Certificate of proposed franchise
  • Appointment of director as agent for service of process

Applicants for a new or used dealer license must also submit the following:

  • Live-scan fingerprint and Request for Live Scan Clearance for each person listed under ownership on the Application for Original Occupational License
  • Fingerprint card (ADM 1316) (out-of-state applicants only); fingerprint cards may be obtained by calling Occupational Licensing (OL) at (916) 229-3126 or from a DMV inspector office
  • Certificate of Completion for the Dealer Education Program (used vehicle dealers and wholesale-only dealers)
  • Proof of passing the used dealer test administered by the DMV (used vehicle dealers and wholesale-only dealers)
    • Applicants have 3 attempts to pass the test. Each failed attempt results in a $16 fee and a one-week wait to retest. After the third failed attempt, the Dealer Education Program must be completed again before another attempt at the testing process.
  • Letter of Authorization (new trailer dealers only; required for each line)
  • Statement of Information or Statement of Information LLC filed with the Secretary of State (corporation, limited liability company, or limited liability partnership owned businesses only)
  • Copy of California Department of Tax and Fee Administration (CDTFA) Resale Permit (enables you to collect sales tax)
  • Photographs of the business location (refer to OL photography requirements)
  • Collect your paperwork and fees, which can include
    • $175 nonrefundable application fee
    • $1 family support program fee
    • $70 fee for each branch location (if applicable)
    • $90 fee for each dealer plate (plus county fees, if applicable)
    • $92 fee for each motorcycle plate (plus county fees, if applicable)
    • $300 new motor vehicle boar fee per location (new automobile, commercial, motorcycle, ATV, motorhome, and recreational trailer dealers only)
    • $100 auto broker endorsement fee
    • $42 fee for each person submitting fingerprint cards
    • $16 examination fee

Once these requirements are fulfilled, you must schedule an inspection with the OL inspector

All required fees, forms, and documents can be submitted to your local DMV inspector, which can be done at the time of your examination. To verify that an inspector will be available, you should schedule an appointment with your local DMV. Look on the DMV’s website to find detailed office information in your area.

Auto dealers must also be licensed by the city or county licensing division where they plan to work. For more information on local licensing requirements, contact the city/county department that regulates auto dealers in your area.

How to renew a California motor vehicle dealer license

To renew an existing California auto dealer license, applicants must complete the following steps:

All documents and fees can be sent to the Department of Motor Vehicles Occupational Licensing Section, P.O. Box 932342 MS L224, Sacramento, CA 94232-3420.

Information on modifying an existing dealer license can be found here.

Why do I need a California auto dealer bond?

California auto dealer bonds regulate the industry and protect consumer interests. Auto dealer bonds protect customers, sellers, financial enterprises, and/or governmental agencies. If a dealer commits fraud or conducts business in other unethical ways, the bond protects against financial loss.

California Vehicle Code Section 11710 specifically requires California auto dealers to file surety bonds before obtaining a license.  Depending on your specific line of work, you will file one of three specific bond forms:

  1. Form OL 25$50,000 Surety Bond of Dealer
  2. Form OL 25A: $50,000 Surety Bond of Vehicle Remanufacturer
  3. Form OL 25B: $10,000 Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, All Terrain Vehicle Dealer, or Wholesale-Only Dealer (fewer than 25 vehicles per year)

If a bonded motor vehicle dealer breaks the bond’s terms, the wronged party (i.e., a customer, bank, or government agency) can make a claim against the California surety bond to get reparation.

A dealer’s license can also be automatically suspended if a court finds the professional liable for certain actions protected by the bond. The license can only be reinstated if the bond is reinstated or if a new bond is purchased.

How much does a California auto dealer bond cost?

The exact price you’ll pay for a surety bond will vary depending on your surety bond’s required amount, the bond application, and your financial credentials.

If your financial credentials qualify you for the standard market, your surety bond rate could be calculated as just 1% of the bond amount, which would only be $500 for a standard $50,000 bond. Conversely, dealers with poor credit could pay a premium that’s a higher percentage of the bond amount. The best way to determine your exact surety bond cost is to obtain a free quote from SuretyBonds.com.

Once you’ve received the original bond documents in the mail, you must submit them to the DMV, along with your other license application documents.

More information on CA dealer bonds can be found on our informative California Auto Dealer Surety Bond Page.

About the Author

Rhaea Lehman
Rhaea is a sophomore at the University of Missouri studying German and Communications. She is a member of the marketing department and outreach team for SuretyBonds.com, a leading provider of online bonding for clients nationwide.

2 Comments on "How to Get a California Auto Dealer License"

  1. Colby Kraus | June 28, 2016 at 4:08 pm |

    Hello Karen,
    SuretyBonds.com is a licensed surety agency that matches individuals and business owners with the underwriting markets best suited to fulfill their bonding needs. For more information on a dealership’s license and bond status, you’d want to contact the California Department of Motor Vehicles. They could also help you with any potential claims.

  2. Karen Henzi | June 28, 2016 at 2:47 pm |

    Intrend auto sales in Sacramento sold a car to my daughter. They took her car in trade and failed to file Dmv paperwork. They also failed to give her title to the new car. Where do we go!

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