Copyrighted © 2013, Dealer License Seminars of San Diego.  

Duplication is Strictly Enforced.

(Great to use to study for DMV exam –  COMMONLY TESTED TOPICS


CHAPTER 1:  California Civil Code 2981 Relating to Motor Vehicle Sales Finance


The conditional sales contract must be in WRITING


Contract cancellation cooling off period is for 2 DAYS


Conditional Sales Contract must include all COSTS and TERMS of payment


A written disclosure is required for after market ADD ON ITEMS


Contract must include signatures of buyer and SELLER


Copies must be furnished to BUYER


Conditional sales contract required for financing and CASH sales



CHAPTER 2:  Vehicle History Disclosure Requirements


Dealer must disclose any Known DAMAGE


ODOMETER replacement must be disclosed


Vehicles which were previous rentals or TAXIS  must be disclosed


Previous LAW  enforcement vehicles must be disclosed


Response to customer INQUIRIES  must be provided



CHAPTER  3: Motor Vehicle Financing


When the dealer is the “bank”, it is more commonly referred to as IN- house financing.   


Terms of financing must be disclosed in the Conditional SALES contract.


The maximum allowable interest rate is generally 29.9 percent.


Computation of interest and conversion to annual percentage rate (apr) and computation of monthly payments is much easier if you use computer SOFTWARE.


Cap on finance mark-up rate occurs when a dealer ASSIGNS a contract.


CHAPTER 4: Truth in Lending


Truth in lending disclosures must appear in the conditional SALES contract


Disclosure of a 3-digit CREDIT SCORE  is required under AB 68           


Contract not EXECUTED means dealer must obtain a signed contract before delivery.


When a buyer defaults, it constitutes a BREACH of the conditional sales contract     


When a buyer defaults, the dealer may hire a REPOSSESSION agency.


When a buyer negotiates in Spanish, use a Spanish CONDITIONAL SALES CONTRACT


Dealer carrying the CONTRACT means the dealer does In-House Financing.      


The maximum documentation preparation fee is 55 dollars.



CHAPTER 5: Sales and Use Tax    


It is unlawful to not REPORT sales tax      


USE tax is due when a tax-free purchase is not resold.


After taxes are collected, you must pay them to the BOARD OF EQUALIZATION


Tax is computed based on the county where the buyer LIVES


Is the document preparation fee taxable?  (YES OR NO) YES


Is the smog certificate fee ($8.25 portion) taxable?  (YES OR NO) NO


Dealers must obtain a Board of equalization resale PERMIT



CHAPTER 6: DIVISION 12 - Relating to Equipment of Vehicles


All safety equipment must be in compliance with division 12


Division 12 safety equipment cannot be WAIVED


It’s OK to sell a car with a burned out headlight if buyer consents (True or False) FALSE


If a car is sold AS-IS, it still needs to be SAFE (True or False) TRUE


CHAPTER 7:  Advertising   


Advertising applies to all MEDIA methods          


Disclosure as a DEALER must be in all forms of advertisements


Vehicle must be identified by VIN, LICENSE PLATE OR STOCK number     


All terms of SALE must be specified


The word “Certified” for used vehicles is now regulated by AB68 (True or False) TRUE


Illegal use of coupons or simulated CHECKS cannot be misleading.     


Withdrawal of vehicle after vehicle is sold must be within 48 hours.


Honoring the advertised price when a buyer is unaware of the ADVERTISEMENT is unlawful         




CHAPTER 8: Odometers     


Must be in working condition at time of RETAIL SALE.


It is illegal to roll back odometers (true or false) TRUE


Notification is required when an odometer is REPAIRED OR REPLACED          


Odometer disclosure must be made by legal owner of REPOSSESSED vehicle  



CHAPTER 9: Vehicle Licensing And Registration



Transfers generally must occur within 30 days.


Secure power of ATTORNEY  is located on the REG 262 form.


Signature  on documents must match the buyer’s DRIVER LICENSE SIGNATURE


Transfer fee costs $15


What does A.S.F. stand for? ADMINISTRATIVE SERVICE FEE    


Quick titles are available for an extra fee (true or false) TRUE


Dealers must refund  excess REGISTRATION fees to buyer.


Weight fees are for COMMERCIAL vehicles.




There are unwinds and there are ROLLBACKS



CHAPTER 10: Branch Locations    


You must apply for a branch location on the form called Application for MODIFICATION


A branch location is not required when a vehicle is displayed and no sales are made or DEPOSITS are accepted at the location.


Fees required   for a branch location cost $70


For a weekend “tent sale”, apply for a TEMPORARY  branch permit.




CHAPTER 11: Unlawful Dealer Activities 


Misusing special plates, or permitting their unlawful USE is unlawful.


Lending dealer supplies and permitting misuse of license or BOOKS  is unlawful.


Selling cars at an unlicensed LOCATION  is unlawful.


Failure to pay administrative SERVICE fees      is unlawful.


Submission of dishonored CHECK to the department is unlawful


Failure to transfer TITLE  is unlawful.


Employing unlicensed SALESPERSONS is unlawful.


Bait and SWITCH  is unlawful.


BIRD dog fees are unlawful.


Ab 68 violations are a misdemeanor crime.  (true or false) TRUE



CHAPTER 12. Air Pollution Control Requirements           


Smog test is required prior to a vehicle being OFFERED for sale    


There are no smog requirements when vehicle is sold at WHOLESALE           


Dealer is allowed to charge retail customers  $58.25 in total smog fees.      


Duration of a smog certificate   for dealers while in inventory is 2 years.


No smog is required for transfers 4 model years or newer   



CHAPTER 13: Regulations Of The Bureau Of Automotive Repair         


What does B.A.R. stand for? BUREAU OF AUTOMOTIVE REPAIR 


A dealer must register with the Bureau of Automotive Repair if the dealer does repair services as a business (true or false) TRUE       


The Bureau of Automotive Repair website




CHAPTER 14: Handling, Completion, And Disposition Of Departmental Forms


Report of SALE is required      


Security of reports of sale is required (true or false) TRUE


The dealer notice must be mailed to the DMV within 5  days.


The WINDOW copy of report of sale   is also known as the “temporary permit”.


Submission of application copy of the report of sale and other documents to the department must be made within 30 DAYS


When ordering report of sales, you must use the appropriate inventory order  POST card



CHAPTER 15: Basic Licensing Requirements      


The DMV website where you can obtain forms is


Additional documents / permits are required as part of the application package (true or false) TRUE


Bond requirements for a retail license are $50,000


Required application fee is $150


A dealer license is renewed every 2 years.


Penalties for late/nonrenewal    are a penalty of $150


Name and address change requirements must be done on the Application for MODIFICATION 


Sign requirements are to be 2 square feet.


If your bond is reduced or expires, there will be an automatic CANCELLATION  of your license.



CHAPTER 16: Use Of Special Dealer Plates         


An owner can use dealer plates for any PURPOSE


Salespersons can use dealer plates for BUSINESS  use only.


Dealer plates are only to be used on vehicles in your INVENTORY           





The Buyer’s Guide is a federally MANDATED program  


The buyer must sign the Buyer’s Guide (true or false) TRUE


Buyer’s Guides must be removed during test drives. (true or false) TRUE



CHAPTER 18: Stolen Vehicle Prevention  


A stolen vehicle will go back to the rightful OWNER


Indicia VERIFICATION can be done to have the VIN number checked out.        


CHAPTER 19: Dmv Enforcement Actions 


Typical actions are Administrative, Criminal       and CIVIL



CHAPTER 20: Warranties  


Dealers must offer 30-day warranties on all vehicles (true or false) FALSE     


When a dealer cannot repair a new vehicle in 4 attempts, the  LEMON  law may apply.


Service contracts can be sold.  These are commonly referred to as extended WARRANTIES


Reserve your seat now!


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