California Auto Dealer Bond Overview

A California motor vehicle dealer bond is a guarantee to your customers that your dealership will follow all relevant California state regulations in your business operations, namely, the Vehicle Code. It’s a prerequisite for obtaining your dealer license in the state.

In essence, the bond is a contractual agreement between your dealership (the principal), the state of California (the obligee) and the surety, which underwrites the bond.

  • California Dealer Bonds: Dealer Surety Bond; Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer or Wholesale-Only Dealer (Less than 25 Vehicles per Year)
  • Obligee: California Department of Motor Vehicles
  • Required Expiration Date of Dealer Bond: Continuous bond
  • Surety Bond: The California auto dealer bond is continuous and therefore does not require a Continuation Certificate
  • Bond Form Revision Date: 11/2010

Your auto dealer bond is a strong indicator of your business’s reliability. The bond acts as a surety credit that showcases the strength of your dealership and its ability to stay legally compliant.

If your business doesn’t follow state regulations, a surety bond claim can be filed against you. The surety provider pays all costs up to the bonding amount for any proven claims. However, you need to reimburse it later on, as stated in the indemnity agreement that accompanies the bonding. Even with the added protection that your surety credit provides, the best policy for your business is to avoid claims as much as possible.

California Auto Dealer Bond Cost

The State of California requires a $50,000 surety bond in order to issue your auto dealer license. In case you want to obtain a license for ATV dealer, motorcycle dealer, motorcycle lessor-retailers or wholesale dealer selling less than 25 vehicles per year, you’ll need to post a $10,000 surety bond.

Your bond cost is only a percentage of the required bond amount. In most cases, it’s between 1%-4%. Thus, if you have to obtain a $10,000 bond, you could pay a premium between $100 and $400.

Plus, you can always decrease your bond cost by following a few tips. You can work on improving your credit score and showcasing your liquidity and assets, which boosts your overall financial status. This can lead to lower bond premium.

Another way to pay less for your bond is to carefully choose your bond provider. Bryant Surety Bonds has exclusive access to great bonding rates because of our excellent relations with multiple A-rated, T-listed surety companies. We are experts in California dealer bonds and we’ll shop around to get you bonded at the lowest price possible.

To get an estimate of your bond price, you can use our surety bond cost calculator on the right side of the page or our surety bond cost page.

Bad Credit Program

Getting an auto dealer bond is more difficult in California, because of more stringent underwriting practices. Even applicants who qualify for standard market bonding in other states, can find themselves in the high-risk group in California. If you have a lower credit score, past bankruptcies, tax liens or civil cases, you might have a hard time obtaining your California auto dealer bond.

That’s why at Bryant Surety Bonds we have a bad credit surety bond program that helps auto dealers with problematic finances to get their much-needed bonds, and stay in operation. The bond premiums are in the range of 5%-15%, which is slightly higher than the regular rates in order to mitigate the risk involved. We’ll give you a specially tailored bonding option that fits your personal needs and situation.

Get Your California Auto Dealer Bond Today

Getting your California auto dealer bond has never been easier. Just apply online to get your quote in no time or call (866)-450-3412. If you need help with your application, our surety bond experts will be happy to guide you through.


About the author:
Todd Bryant
Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post, Entrepreneur.com, Azcentral.com and many more.