Copyrighted © 2013, Dealer License Seminars of San Diego.
Duplication is Strictly Enforced.
(Great to use to study for DMV exam
– COMMONLY TESTED TOPICS
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
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
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.
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.
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
6: DIVISION 12 - Relating to Equipment
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
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
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
disclosure must be made by legal owner
of REPOSSESSED vehicle
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.
What does P.T.I. stand for? PERMANENT TRAILER IDENTIFICATION
There are unwinds and there are ROLLBACKS
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
a weekend “tent sale”, apply for a
TEMPORARY branch permit.
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
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
13: Regulations Of The Bureau Of
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 www.smogcheck.ca.gov
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
15: Basic Licensing Requirements
The DMV website where you can obtain forms is www.dmv.ca.gov
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.
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
17: FEDERAL BUYER’S GUIDE
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
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.
19: Dmv Enforcement Actions
Typical actions are Administrative, Criminal and CIVIL
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