How to Get a Used Car Dealer License in California

Published: Aug 20, 2018
California Used Car Dealer License Guide

 

To open a used car dealership in California, you will need to apply for a license at the state Department of Motor Vehicles. To obtain your license, you will need to fulfill several licensing requirements. For example, you will need to pass both an educational course as well as an examination prior to submitting your application. You will also need to submit a California used car dealer bond as part of the process.

Here’s what you need to know about applying for your California used car dealer license!

**NEW:** Download our FREE e-book guide containing comprehensive information on how to start your own dealership, from getting licensed and bonded to securing financing and cars for your lot!

California Used Car Dealer License Requirements

You can find all forms and documents you must complete for your application at the DMV dealer application requirements website. To get an initial grasp on what is required of you as an applicant, you can consult the Vehicle Dealer Handbook. The handbook contains all the details regarding location requirements, how to complete your application, and where to file it, etc. Prior to setting out to apply for your license, you must, of course, have complied with such requirements.

The main document you must complete as an applicant is the California used car dealer license application. The application includes the following forms, all of which must be completed in full:

  • OL 12, Application for Original Occupational License, Part C
  • OL 21A, Original Application for Occupational License, Part A
  • OL 25, Surety Bond of Dealer
  • OL 53, Authorization to Release Financial Information
  • OL 29B, Application for Occupational License Personal History Questionnaire, Part B (to be completed for every person listed under ownership on form OL 12)
  • ADM 9050, Appointment of Director as Agent for Service of Process (to be completed for every person listed under ownership on form OL 12)
  • DMV 8016, Request for Live Scan Clearance (to be completed by every person listed in form OL 29B)

Along with completing the above, applicants must include several other documents to their application. These include:

  • А Certificate of Completion of a dealer education program offered by an approved education provider
  • Proof of passing the Used Dealer Test with your local Occupational Licensing Inspector
  • A Statement of Information (if you are filing as a Corporation or LLC)
  • A Fictitious Name Statement (if applicable)
  • A copy of your rental or lease agreement
  • Copies of your business license documents (if required by your city or county)
  • A copy of your State Board of Equalization Resale Permit
  • Photographs of your dealership location that show you comply with location requirements

Prior to submitting your application, you will need to have an on-site inspection conducted at your business location from a local inspector. Your license can only be issued if your application and location comply with all requirements. Once you are ready to submit your application, you also need to pay several fees:

  • $175 application fee
  • $70 fee for every branch office
  • $87 dealer plate fee
  • $1 family support fee

Surety Bond Cost

The amount of the surety bond for used car dealers in California is $50,000. The bond amount is not equal to the cost of getting bonded, though! The cost of your bond is equal to a fraction of the whole amount of the bond.

When you apply to get bonded the surety will look at your personal credit score, your personal and business financial statements, and possibly at other financial information. Primarily based on your score, the surety will determine your bond premium or rate. The higher your credit score, the lower your rate will be.

For example, applicants with a credit score of 700 FICO or more can expect to get a rate on their bond equal to .75%-1.5% of the full amount of their bond. If you are offered a 1% quote, that would mean that you would need to pay $500 for your bond.

Want to know how much your bond will cost? Click on the banner below to complete our bond form and get a free and exact quote!

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.

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