In California, auto dealers are required to post a surety bond as a licensing requirement. But not every auto dealer surety bond is the same; different dealer licenses often require different surety bonds. The most common auto dealer bond in California is the $50,000 Dealer Surety Bond for new car dealers that sell over 25 vehicles per year. However, if you are one of the following, you’ll need the $10,000 California Motorcycle Dealer, Retailer, All-Terrain Vehicle Dealer, and Wholesale Dealer Bond:
But what is a surety bond? A surety bond is a contract between the principal, obligee, and the surety company that backs the bond. In this case, the principal is the auto dealer, and the obligee is the California Department of Motor Vehicles. The bond protects both the obligee (from liability) and the public (from financial injury).
The California Motorcycle Dealer/Lessor-Retailer, ATV Dealer, and Wholesale-Only Dealer Bond ensures that dealers will act according to the California Vehicle Code. If a dealer commits fraud or their actions cause injury to the public due to a failure to uphold relevant laws and regulations, this may result in a claim against the dealer’s surety bond.
Specifically, the injured party (typically a customer) can file a claim against the dealer’s bond. The surety company will investigate that claim and, if the claim is valid, financially compensate the injured party up to the bond amount, in this case, $10,000. The dealer is responsible for reimbursing the surety for the payments of all valid claims.
The bond runs concurrently with the principal’s licensing period and is to be renewed annually along with their license.
The entity that requires you to have a bond, called the obligee, for the California Motorcycle Dealer, Retailer, ATV Dealer, or Wholesale Dealer Bond is the California Department of Motor Vehicles, Occupational Licensing Branch. Their contact information is as follows:
CA DMV Occupational Licensing Branch:
8243 Demetre Ave
Sacramento, CA 95828
Phone: (916) 229-3126
The surety company will calculate how much this bond costs for each applicant based on factors such as your credit score (using a soft credit check) and years of experience in the industry. Individuals with excellent credit and significant experience can see premium rates starting as low as 1-2%.
If you’re new to the industry or have nonstandard (poor) credit, we encourage you to apply for your free quote anyway. At EZ Surety Bonds, we work with a variety of surety carriers, including markets that can quote nonstandard credit, to find you the best rate available.
At EZ Surety Bonds, applying for your bond is easy. Simply fill out the short application, and we’ll contact you regarding your free quote within 24 hours.
Surety bonding can be confusing—we get it. So, if you ever have questions, contact our surety experts at info@ezsuretybonds.com or by calling 1-866-546-4605. We’re happy to help!
How do I obtain a California Motorcycle Dealer, Retailer, and Wholesale-Only Dealer License?
The application process and the requirements to be a licensed dealer in California vary slightly depending on the type of license you apply for. But, in general, applicants must complete the following steps:
You can find more detailed information regarding this process on the California DMV’s website.
How much does a motor vehicle dealer bond cost?
In California, there is the $50,000 Motor Vehicle Dealer Surety Bond and the $10,000 Motorcycle Dealer, Retailer, All-Terrain Vehicle Dealer, Wholesale Dealer Bond. What you pay for your surety bond typically depends on several factors, including (but not limited to) your credit, industry experience, and personal and business financials. The surety will assign you a premium rate which, if you have strong financials, significant industry experience, and standard credit, could start anywhere from 1% to 3% of your bond amount and higher for less qualified individuals.
I purchased my California Motorcycle Dealer, Retailer, All-Terrain Vehicle Dealer, and Wholesale Dealer Bond—now what?
Every obligee has different requirements outlining what you need to do with your bond when you get one. Once you purchase your bond with EZ Surety Bonds, we will mail the original document to you. Some obligees require you to sign the original and file it with them directly. Others may accept an electronic copy. We strongly advise confirming the filing requirements with your obligee before doing anything with your bond.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.
