What Is a California Wholesale Dealer Bond?
Wholesale auto dealers in California have to go through a licensing process that ensures their suitability for conducting dealership activities in the state. A main requirement is obtaining a wholesale dealer bond.
The purpose of your surety bond is to protect the state and your customers against potentially harmful and illegal activities you may engage in as a dealer.
This auto dealer bond works as a contract between your wholesale dealership as the principal, and two other entities. The California Department of Motor Vehicles is the obligee requiring the bonding. The third party is the surety, which is the bond provider.
Questions about Wholesale Dealer Bonds in California
When do I need to get bonded?
Any entity that wants to operate as a wholesale dealer in California needs to undergo a licensing procedure. It is handled by the Department of Motor Vehicles. This license type allows you to work with up to 25 vehicles per year. The bond amount required is $10,000 for wholesale dealers. The bond ensures your legal compliance with the California Vehicle Code.
What’s the California wholesale dealer bond cost?
The bond amount that you have to post to get a California wholesale dealer license is $10,000. To get bonded, you only have to pay a small percentage of it, referred to as the bond premium.
What factors determine your surety bond cost? The most important ones include personal credit score, business finances, liquidity and assets, and business knowhow. Your surety needs to assess the bonding risk on the basis of these criteria. The more stable they are, the smaller your bond price will be. The typical rates for applicants with good credit are between 1% and 5% of the bond amount.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|California wholesale dealer bond||$10,000||$100-$150||$100-$300||$250-$500||$500-$1,000|
Is it possible to get a CA wholesale dealer bond with bad credit?
With Lance Surety Bonds you can obtain the bond you need even if you have bad credit. For applicants with a low credit score, tax liens, bankruptcies, or civil judgements, our Bad Credit Surety Bonds program is a good choice.
The typical bonding rates for higher risk bonding are between 5% to 10%. Due to our close partnerships with a number of A-rated, T-listed surety companies, we can still offer you a great bonding option.
How do I apply for a bond?
Would you like to learn more about the way bonding works? Make sure to check out our extensive How to Get Bonded page.
Have further questions or need help with your appllication? Lance Surety Bonds’ experts are here to help. Just call us at (877) 514-5146.
What if I get a claim against my bond?
The goal of your wholesale dealer bond is to protect your customers. If you fail to follow the California Vehicle Code and any other applicable laws, you can end up with a claim against your bond. This is how affected parties can demand a fair reimbursement.
The claimants can seek a compensation of up to $10,000, which is the bond amount you have posted. While at first your surety may cover the costs, you have to repay it fully, as per the bond indemnity agreement. This means that it’s best to avoid bond claims, as they can lead to financial losses, as well as problems with getting bonded in the future.