California Surety Bond of Dealer Apply now

Who needs a California Surety Bond of Dealer?

Most car dealerships need a California surety bond of dealer.  There are two bond types:

  • OL 25 – This bond type is needed by all vehicle dealers who sell more than 25 cars per year.
  • OL 25B – This bond type is needed by all motorcycle, ATV, and wholesale car dealers who sell lees than 25 cars per year.

You will need to supply one of the bond forms mentioned above to the DMV.  Your bond type is determined by the type of vehicles you sell and how many you sell in one year.

What is a California Surety Bond of Dealer?

A California surety bond of dealer is a form of credit offered by a surety company.  These bonds are meant to protect your clients from financial harm caused by your actions.  Your California dealer license is regulated by CA Vehicle Code Section 11700-11740.  In particular, section 11711 defines what actions can harm your clients.  In an nutshell, the bond is needed to protect your clients against fraud committed by you or your company.  Common claims include taking payment from one customer and selling the car to another customer, failure to transfer title, and misrepresentation of a vehicle.

What does California Surety Bond of Dealer cost?

The cost of your bond depends on a few factors.  Personal credit score, experience, and length of time in business all affect your bond cost.  Additionally, the amount of your surety bond can also increase or decrease your annual premium.  For example: The bond amount needed for form OL 25 is $50,000 and form OL 25B is $10,000.  The higher the bond amount; the higher your cost.  Listed below are the average costs for each type of bond:

  • OL 25 – $50,000 bond amount = $500 annually for good credit
  • OL 25B – $10,000 bond amount = $100 annually for good credit

If you remember, we discussed credit being a factor of your bond cost.  Your premium will increase as your credit score decreases.  However, DBL Surety has direct access to several surety companies who write dealer bonds regardless of credit.  The best way to find out how much your bond will cost is to apply online.

How does a California Surety Bond of Dealer work?

As mentioned above, your dealer bond is an extension of credit to you by a surety.  To put it in perspective, let’s say a friend of yours wants to buy a car.  He applies for financing but is told he needs a cosigner on loan.  You agree to cosign the loan for your friend and then he stops making payments.  Now you’re on the hook for his mistake because you signed on his behalf.  The finance company can now come back to you (and your friend) to be reimbursed for the money your friend owes.  You, as the cosigner, are acting as an individual surety for your friend.  As a surety, you are vouching for his performance.

So, when you purchase your CA surety bond of dealer, the surety company is the one guaranteeing your performance.  By issuing the bond, the surety company is saying that they believe you will perform as expected.  If not, they agree to be responsible for your actions up to the bond amount.  However, it’s important to note that surety bonds are not insurance.  The surety will attempt to collect from you and your business any money or costs paid on your behalf.  Again, you are responsible for reimbursing the surety company if any claims are paid.

How do I apply for a California Surety Bond of Dealer?

  1. Complete our online California Surety Bond of Dealer application, or
  2. Download and complete our printable California Surety Bond of Dealer application, and
  3. Receive your surety bond quote in minutes!

Apply now


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