California Auto Dealer Bond

The bond for an auto dealer must be in the sum of $50,000, unless the dealer exclusively deals in motorcycles or all-terrain vehicles, in which case the bond shall be in the amount of $10,000.

Dealer bonds are renewed annually, and for this, bonding companies charge what’s called the premium. The premium is only between 1% and 3% of the bond amount for applicants with good credit. This means that, for a $50,000 bond, you’ll only have to pay between $500 and $1,500. Credit score is the single most important determinant of your premium, because surety underwriters use it to measure the risk they undertake by writing the bond.

1. Complete an application

To begin the bonding process, just fill out our online application form. You'll need to provide additional information and essential documents to determine the required type and amount of bond. We'll guide you through each step, ensuring a smooth experience.

We recently aided a newly established auto dealer in California with their Auto Dealer Bond application. Despite their deep understanding of the automotive sector, they felt compelled to seek advice regarding the nuanced aspects of the bond and how it could impact their business operations. Understanding their commitment to customer service, we provided personalized assistance throughout the application process. By simplifying the requirements, we helped them navigate California's regulations effortlessly, ensuring a smooth launch and solidifying their reputation as a dependable auto dealer.

2. Complete the premium payment process

After we receive your application, our team quickly evaluates it and then provides you your free quote. Once you pay, we continue with the next steps.

3. Receive your bond

Once your bond premium is paid, you are officially bonded. Your bond will be sent to you via email, and a paper copy will be mailed if necessary.

If you have any questions or encounter any difficulties, our surety bonds experts are here to help you – just call us at (877) 514-5146.

California Department of Motor Vehicles requires individuals working as general or wholesale dealers to file a surety bond when obtaining a auto dealer license in order to operate in California according to California Vehicle Code Division 5 Chapter 4 Section 11710

If you're an auto dealer, fill out Form OL25. If you're a motorcycle dealer, all-terrain vehicle dealer, or wholesale-only dealer (less than 25 vehicles per year), fill out Form OL25B. After completion, mail it to the California Department of Motor Vehicles (DMV) as part of the dealership license application process to meet the bonding requirement.

Licensing Operations Division

Occupational Licensing Branch

P.O. Box 932342, MS: L224

Sacramento, CA 94232-3420

California dealer bonds must be renewed annually by paying the renewal fee before the due date. The annual review by an underwriter may cause the cost to vary based on financial strength and personal credit. Improving your credit or financial situation often leads to a lower renewal quote. 

Note (wholesale-only): Dealers must submit an exception (Form 56) to the Occupational Licensing Branch of the DMV if they sell over 25 cars per year to bypass the $50,000 bond requirement and be eligible for the $10,000 bond instead.

At Lance Surety Bonds we help our customers stay compliant by sending multiple renewal reminders ahead of the deadlines. That way you can focus on what matters to you: your business.

Filing a claim in California underscores that an auto dealer's bond protects customers rather than the business itself and ensures the provision of appropriate services. However, engaging in fraudulent activities or violating regulations can result in a claim against the bond. 

If the claim is validated, your business may face significant financial repercussions. You would be required to reimburse the affected parties up to the bond's penal amount. Initially, your surety will cover the costs, but ultimately, you are responsible for all expenses incurred.

The state of California requires all auto dealers, auto brokers and wholesalers working in the state to get a California dealer license. So, if you plan to sell new or used vehicles, or to act as an auto broker or wholesaler, anywhere in the state, you’ll need to apply to the Department of Motor Vehicles for an auto dealer license.