California legally requires a variety of individuals, contractors, and organizations to secure surety bonds to conduct business across the public service industry. Apply for a California Surety Bond today! Absolute Surety is a leading California bonding company providing bonds with a convenient online application system. Browse the most common types of bonds in this state, or contact us for a full list.
Learn more about California auto dealer bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are They?
Dealer bonds fall into the category of license and permit surety bonds, because they are required as a condition of obtaining a license to operate a dealership in the state of California.
The purpose of this bond is to protect the state and consumers from any financial loss stemming from the dealer’s failure to abide by all relevant state rules and regulations—as set forth in the terms and conditions of the surety bond agreement.
All retail dealers selling new and/or used vehicles other than motorcycles and ATVs are required to purchase a $50,000 Auto Dealer Bond. Dealers selling new and/or used motorcycles and ATVs are obligated to purchase a bond in the amount of $10,000. Dealers who sell wholesale only and sell fewer than 25 vehicles a year also must purchase a motor vehicle dealer bond in the amount of $10,000.
The three parties to a Motor Vehicle Dealer Bond contract are:
Each of these parties has specific rights and responsibilities under the terms and conditions of the surety bond agreement.
The California Department of Motor Vehicles has established the required bond amount and the specific rules the dealer must comply with in order to avoid claims against the bond. If the dealer fails to operate within those rules, any party who suffers a financial loss as a consequence of the dealer’s actions is entitled to submit a claim against the bond.
The surety company will investigate each claim to ensure that it is valid. If it is, the surety will make payment to the claimant as an advance on behalf of the dealer. This does not relieve the dealer of any financial obligation. It simply gives the dealer time to come up with the funds to make payment. The indemnification clause included in the bond agreement requires that the dealer reimburses the surety within an agreed-upon period of time.
The required bond amount may seem like a lot of money, but the dealer pays only a small percentage of that amount as the premium for the bond. The surety takes into account a number of factors, most notably the dealer’s personal credit score, in determining the premium rate.
You can expect to pay anywhere between .9% to 5% of the bond penalty amount if you maintain good credit. For individuals with lower credit ratings, we can still offer the most competitive premiums with financing sometimes being an option.
After you receive your dealer bond from Absolute Surety, you will need to file it along with the attached power of attorney with:
State of California
Licensing Operations Division
Occupational Licensing Branch
P O Box 932342, MS L224
Sacramento, CA 94232-3420
Apply Now
You can request a quote for a California auto dealer bond online or, if you prefer, you can call and ask to speak with one of our experts.