California Dealer Bond Guide
If you are applying to become a licensed auto dealer in California, you will need to purchase a surety bond. Read on to learn all about the bonding process in this guide.
Bond Overview
- Purpose: To protect dealership consumers from financial harm
- Who Needs It: All motor vehicle dealers in California
- Regulating Body: The California Department of Motor Vehicles
- Required Amount: $50,000 for standard dealers, $10,000 for motorcycle, ATV or wholesale dealers
- Premium Rate: Typically 1–5% of the bond amount, credit-based
What Is a California Auto Dealer Bond?
A California auto dealer bond, or motor vehicle dealer bond, guarantees a vehicle dealer will follow state laws and regulations. It is a licensing requirement for all new and used auto dealers and wholesalers in California.
To understand the auto dealer bond process in California, it's important to recognize the roles of the key parties involved:
- Obligee: The California Department of Motor Vehicles (DMV) requiring the bond to issue a license to motor vehicle dealers.
- Principal: The auto dealer who files the bond to guarantee compliance with regulatory laws.
- Surety: The provider issuing the bond to the principal, supporting the dealer's commitment to meet their obligations.
How Do California Auto Dealer Bonds Work?
By filing this bond, vehicle dealers agree to follow California Vehicle Code Section 11711. If they fail to comply, harmed individuals — particularly consumers — can file a claim against the bond.
This protects dealership consumers from financial harm due to fraudulent business practices, title and registration fraud, or other illegal selling practices. The surety company will cover valid claims up to the full bond amount, which the dealer must then reimburse.
How to Get a California Auto Dealer Bond
SuretyBonds.com provides the fastest and easiest way to get a California auto dealer bond:
- Apply online at SuretyBonds.com
- Get a free quote within one business day
- Purchase your bond online
- File the bond with the DMV
How Much Does a California Auto Dealer Bond Cost?
The cost of a California auto dealer surety bond depends on the type of dealer license you need:
- Wholesale Dealers: Sell vehicles exclusively between licensed dealers.
- Vehicle Dealers: Sell 25+ new or used vehicles, motorcycles, snowmobiles, ATVs, or trailers to consumers per year.
Standard vehicle dealerships in California need a $50,000 bond starting at $500, while wholesalers and motorcycle or ATV dealers may only need $10,000 in coverage.
- $10,000 Dealer Bond (for Lessor-Retailer, All-Terrain, or Wholesale Vehicle Dealers of less than 25 vehicles per year): Annual premiums start at $100.
- $50,000 Vehicle Lessor-Retailer Bond (for Lessor-Retailer dealers of 25+ vehicles per year): Annual premiums start at $500
- $50,000 Dealer Bond (for Motor Vehicle Dealers): Annual premiums start at $500.
Save an additional 25% on subsequent years by selecting a multi-year term!
How Fast Can I Get an Auto Dealer Bond?
We use the best tech and a great team to deliver California auto dealer bonds faster than any provider. Orders placed by 4 PM CST Monday-Friday usually get emailed the same day.
Have questions? Call us at 1 (800) 308-4358, and our friendly experts will help you out so you can get back to business.
How to Get a California Auto Dealer License
The California DMV has different licensing requirements depending on whether you sell new, used, or wholesale motor vehicles. You’ll follow these general steps to get your California dealer license:
- Register your business with the state
- Complete pre-licensing education
- Purchase an auto dealer bond
- Schedule a business site inspection
- Apply with the DMV and pay fees
- Pass a background check
While these steps provide an overview, the process of obtaining a California auto dealer license is more in-depth. Learn How To Get A California Auto Dealer License by reviewing our comprehensive guide.
