Have fun with our DMV Practice Test, reinforcing what you learned in our course. Stuck on a question? Click “Hint” for helpful information.
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Question 1 of 81
1. Question
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Question 2 of 81
2. Question
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ANY of the following actions could result in a Dealer license suspension:
- Misuse of Special (Dealer) Plates
- Bait & Switch advertising schemes
- Failure to pay Administrative Service Fees when due
- Submission of dishonored check to Department
- Selling at unlicensed locations
- Failure to transfer title
- Paying “Bird Dog” fees
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Question 3 of 81
3. Question
CorrectIncorrectHint
The Guide must be in plain view (with both sides visible) and may be either:
- Hung from the rear-view mirror or outside side-view mirror
- Placed under a windshield wiper.
- Attached to a side window
A Guide in a glove compartment, trunk, or under the seat is not conspicuous because it is not in plain sight.
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Question 4 of 81
4. Question
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The DMV and State and Federal regulatory agencies can limit, suspend, or revoke a Dealer’s license and or impose penalties should they fail to abide by the laws and regulations governing Dealers.
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Question 5 of 81
5. Question
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All Dealers must have a Surety Bond valued on their license type and provide proof:
- OL 25 New or Used Auto-Commercial Dealer ($50,000)
- OL 25B Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer, or Wholesale-Only Dealer (Less Than 25 Vehicles Per Year) $10,000
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Question 6 of 81
6. Question
CorrectIncorrectHint
Never advertise or sell a used vehicle as “Certified” when:
- The odometer does not indicate the actual mileage of the vehicle
- The manufacturer or dealer reacquired the vehicle under state or federal warranty law (i.e., “lemon law”)
- The vehicle was damaged by a collision, fire, or flood unless repaired to a safe operational condition prior to the sale
- The title was branded as a lemon law buyback, manufacturer repurchase, salvage, junk, non-repairable, or similar designation
- The vehicle has frame damage or was sold “as is”
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Question 7 of 81
7. Question
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If the odometer cannot register the same mileage as before the repair, it must be adjusted to read “0” with a notice attached to the vehicle’s left door frame (specifying the prior mileage and the date on which it was serviced, repaired, or replaced) by the person performing the service or repair.
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Question 8 of 81
8. Question
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Dealers must securely store all records including their Reports of Sale and are required to “implement federal safeguard standards for storage” and maintain the records of vehicle transaction for 90 days (was 18 months) at the principal place of business or branch location.
After 3 months (90 days), use an offsite storage facility within the state or third-party vendor to maintain records for a total storage requirement of 36 months / 3 years.
- Digital storage is acceptable after the initial 90 days
- DMV requested records must be provided within 3 business days
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Question 9 of 81
9. Question
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California’s “Car Buyer Bill of Rights” (AB 68) limits a Dealer’s compensation from an institution financing the purchase of a vehicle is limited to no more than:
- 2.5% for terms up to 60 months
- 2.0% for terms of 60 months or longer
This limitation does not apply when the assignment requires the Dealer to bear the entire risk of financial performance for the consumer or when the assignment is more than six months after the date of the Conditional Sale Contract.
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Question 10 of 81
10. Question
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When a Dealer sells a Lemon Law buyback vehicle, they must notify the buyer on letter-size paper of the following:
- The year, make, model, and vehicle identification number
- That the vehicle title is marked “Lemon Law Buyback”
- The nature of each nonconformity reported by the vehicle’s original buyer or lessee
- Any repairs made to the vehicle in an attempt to correct each nonconformity
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Question 11 of 81
11. Question
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Dealers must now renew their license online yearly (a two-year term is optional, later) and upload:
- Proof of Continuing Education (every two years)
- Proof of Surety Bond
- Payment of Renewal Fees
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Question 12 of 81
12. Question
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(a) A sole owner, a general partner, a manager of a limited liability company, or a corporate officer or director of a Dealer provided that individual is actively engaged in the management and control of the Dealer’s business operations
(b) A general manager, business manager, or sales manager who is actively engaged in the management and control of the business operations of the Dealer when no other individual meets the criteria in (a) above
(c) A driver -if- an individual identified in section (b) is also in the vehicle.
(d) An unaccompanied adult who regularly resides in the household of individuals identified in section (b) to pick up or drop off that individual.
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Question 13 of 81
13. Question
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You must provide:
- A Contract Cancellation Option* with a “2-day cooling-off period”
- All costs and terms of payment
- Written Disclosure(s) for any aftermarket add-on items
- All financial aspects of the sale
- Signatures of both the Buyer and the Seller
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Question 14 of 81
14. Question
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You must disclose any vehicle modifications which alter the vehicle from the vehicle manufacturer’s original specification.
Examples of this would include suspension, oversized tires & wheel or exhaust systems.
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Question 15 of 81
15. Question
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Additional individuals may operate a vehicle with special plates:
(a) Employees of a Dealer when they are acting within the course and scope of their employment
(b) Drivers for special event purposes, if they carry a letter of authorization from the Dealer
(c) A prospective buyer or lessee, to test drive a vehicle, up to seven days.
(d) Employees of Dealer, who must operate a commercial vehicle in the course of their employment, taking a commercial test drive.
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Question 16 of 81
16. Question
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Dealers must convert all interest rates to standard APR (Annual Percentage Rate.
The Annual Percentage Rate (APR) is the annual rate charged for the Buyer’s loan, shown as a percentage that represents the actual yearly cost of borrowing over the term of a loan.
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Question 17 of 81
17. Question
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The Dealer must check the “Mileage EXCEEDS the mechanical limits” box on the REG 262.
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Question 18 of 81
18. Question
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California’s Vehicle Code requires that you do not sell or offer a vehicle for sale unless all of its safety equipment is in proper working condition.
It does not matter if you tell the Buyer about the safety defects – this requirement cannot be waived by a Dealer or Buyer.
The Code does not apply when the Vehicle:
- Is sold to another Dealer
- Is being legally wrecked, dismantled
- Used exclusively off-highway
- Is a leased, registered in California, and sold to the person leasing it (if they were in possession of the vehicle immediately prior to the sale)
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Question 19 of 81
19. Question
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California Vehicle Code Section 11721 provides for the automatic cancellation of a Dealer’s License and Special Plate when the:
- Dealer abandons or changes their location without immediately notifying the DMV
- Dealer fails to maintain an adequate Surety Bond
- Dealer voluntary or involuntary surrenders the Special Plates and License
- Person designated as the Dealer has changed
- Corporate status of the Dealer is suspended or revoked
- Board of Equalization suspends or revokes the Dealer’s Seller’s Permit
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Question 20 of 81
20. Question
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An additional DMV License or Permit is not required for “display only” areas if:
- The area is within 1,000 feet of your dealership
- No sales take place within that area
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Question 21 of 81
21. Question
CorrectIncorrectHint
- The windshield’s condition must not impair the driver’s vision
- The windshield defrosting device and windshield wipers must be in good operating condition
- Sunglasses won’t help – you’ll still need a windshield
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Question 22 of 81
22. Question
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Within Ten (10) business days prior to the event, the Dealer must submit the following to the Inspector having jurisdiction over the temporary branch location:
- Application for Temporary Branch Location (form OL 73)
- For new product sales, submit the manufacturer’s authorization for each line/make being sold. The authorization must show the Temporary Branch address, on the correct form:
- OL 124 for Auto/Commercial,Motorcycle and All-Terrain Vehicles
- OL 73A for Motorhomes and Recreational Trailers
- OL 73C for Trailers and Snowmobiles
- Copy of lease/rental agreement or copy of the promoter’s contract
- Property Use Verification for Vehicle Dealer’s License, OL 902 (required for some locations).
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Question 23 of 81
23. Question
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Dealer can apply for a Permanent Branch Location here. Paper applications are no longer accepted.
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Question 24 of 81
24. Question
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Dealers are required to provide a smog certificate for all vehicles prior to a vehicle being offered for sale including:
- Gas-powered 1976 and newer
- Diesel-powered 1998 and newer with a GVWR under 14,000
Smog Certificates are not required for vehicles:
- Four (4) years old or newer
- Sold to other licensed Dealers or sold at auctions
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Question 25 of 81
25. Question
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A vehicle must be in a Dealer’s inventory and for sale before anyone can use a Special (Dealer) Plate on it.
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Question 26 of 81
26. Question
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You may not sell any vehicle manufactured after January 1, 1968 unless it is equipped with seat belts for each seating position
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Question 27 of 81
27. Question
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The following documents must be submitted to the DMV for the basic Dealer transfer of ownership for a California-registered vehicle:
- California Certificate of Title (or Application for Title, REG 227)
- Vehicle/Vessel Transfer and Reassignment Form (REG 262) — with Power of Attorney
- Report of Sale (REG 51)
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Question 28 of 81
28. Question
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Dealers are allowed to charge $50 for the smog test plus the actual State fees charged for Certificates
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Question 29 of 81
29. Question
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Odometers must be in working condition at the time of sale – it is illegal to rollback, disconnect, or reset the odometer of any motor vehicle.
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Question 30 of 81
30. Question
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1) The vehicle’s cash price alone
2) Any fees charged for:
- Contract Cancellation Option Agreement
- Document processing charges
- Debt cancellation agreements
- DMV registration or transfer fees
- Electric vehicle charging station or installation services (labeled “EV Charging Station”)
- Prior credit or lease balance remaining on trade-in (labeled “Prior Credit or Lease Balance”)
- Sales tax
- Smog Certification fees
- Service contracts
- Theft-deterrent products
- Surface protection products
3) The total cash price, which is the sum of #1 and #2
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Question 31 of 81
31. Question
CorrectIncorrectHint
You must register with the Bureau of Automotive Repair (BAR) as an Automotive Repair Dealer (ARD) if your Dealership:
- Performs repairs that require mechanical expertise
- Performs repairs to a part of the vehicle essential to its safe operation
- Receives compensation for any repair (including body repair work)
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Question 32 of 81
32. Question
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Some minor* repairs are permitted without BAR registration including:
- Repairs made as part of a business agreement between a repair dealer and a business or commercial enterprise
- Repairing or replacing tires, lubricating vehicles, installing bulbs, batteries, wiper blades, and minor accessories
- Replacing spark plugs, fan belts, filters, and other services customarily performed by gasoline service stations
“Repair” means all maintenance and repairs to motor vehicles performed, including automotive body repair work.
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Question 33 of 81
33. Question
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The VSCP contract company must hold a special license from the California Dept.
Only car dealers may legally sell a VSCP service contract.
Companies selling Service Contracts over the Internet directly to consumers are breaking the law.
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Question 34 of 81
34. Question
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If you collect estimated DMV fees that exceed the amount paid to the DMV, you must refund the difference to the Buyer – regardless of how small the amount is.
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Question 35 of 81
35. Question
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The maximum you may charge for Contract Cancellation Option Agreements is:
- $75 for a vehicle costing $5,000 or less
- $150 for a vehicle costing more than $5,000, but not more than $10,000
- $250 for a vehicle costing more than $10,000, but not more than $30,000
- One percent of the purchase price for a vehicle costing more than $30,000, but less than $40,000
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Question 36 of 81
36. Question
CorrectIncorrectHint
Taxable portions of the Conditional Sales Contract include:
- The selling price of the vehicle
- Accessories installed, not included in vehicle price (parts and labor)
- The labor portion of the Smog Fee
- Document Preparation Service Fee
Non-taxable items of the Conditional Sales Contract include:
- DMV fees (license & registration)
- California State Smog Certificate fee
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Question 37 of 81
37. Question
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You must disclose to your Buyer if the vehicle is, or ever was a taxi, rental car, police, or law enforcement vehicle.
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Question 38 of 81
38. Question
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Dealers who fail to comply with the terms of a Consignment Agreement or pay the agreed amount to the Consignor within 20 days after the date of sale could have their license suspended or revoked.
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Question 39 of 81
39. Question
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California Used Vehicle Dealers are not required to disclose prior accidents or frame damage
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Question 40 of 81
40. Question
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When Advertising Always:
- Identify yourself as a dealer and include your dealership name & DMV license number
- Identify the vehicle advertised by its license number -or- VIN (last 6 digits or more) and the year, make, and model
- Fully specify and disclose all Terms of Sale in the advertisement, including all costs (except taxes, registration fees, tire fee, smog fees, and DOC fee)
- Withdraw ad(s) within 48 hours when the vehicle has been sold or is no longer for sale
- Honor an advertised price, even if the buyer is not aware of the advertisement
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Question 41 of 81
41. Question
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Dealers must disclose all Terms of Financing, including any item purchased.
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Question 42 of 81
42. Question
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The DMV will immediately cancel your license if you abandon your location without notifying them.
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Question 43 of 81
43. Question
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If the Dealer breaches the Contract after the Buyer leaves his motor vehicle as a down payment (trade-in) you must within five days:
- Return the vehicle to the Buyer -or-
- Pay the Buyer the fair market value -or- the value in the Contract (whichever is greater)
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Question 44 of 81
44. Question
CorrectIncorrectHint
Each credit score obtained and used by the dealerDealers are required by the Car Buyer’s Bill of Rights (FFVR 35) to provide Buyers with a separate, written “Notice to Vehicle Credit Applicant” in at least 10-point type which discloses:
- The date the credit score was created
- The name of the consumer reporting agency for each credit score used by the dealer
- The range of possible credit scores used to generate that credit score
- Statements:
- “A Consumer Report or Credit Report is a record of the consumer’s credit history and includes information about whether the consumer pays their obligations on time and the amount owed to creditors”
- “A Credit Score numerical rating is derived from information in a consumer report and can fluctuate over time to reflect changes in the consumer’s credit history”
- “Consumer’s credit scores may affect whether the Consumer can obtain credit and the cost of that credit”
- The distribution of the consumer credit score used to generate the same credit score provided to the consumer
- Contact information for the centralized source from which consumers may obtain their free annual consumer reports
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Question 45 of 81
45. Question
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You must post a Buyers Guide before you display a vehicle for sale even if the car is not fully prepared for delivery
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Question 46 of 81
46. Question
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License plates are registration “indicia” and, combined with the Vehicle Identification Number (VIN), can help identify stolen vehicles before purchasing or taking one on trade. VINs can be checked via the National Motor Vehicle Title Information System (NMVTIS).
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Question 47 of 81
47. Question
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A “Report of Sale — Used Vehicle” (DMV form REG 51) must be completed when you sell a vehicle to a Consumer and
- Attach the bottom tear-off section (bottom 1/3rd) of the Report of Sale to the sold vehicle* before delivery of the vehicle to the Buyer
- Submit the main (upper) portion of the REG 51 with other title transfer documents
*Choose an area that won’t block the driver’s vision such as the lower, passenger side of the windshield.
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Question 48 of 81
48. Question
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Dealers must collect Sales or Use Tax whenever you sell a vehicle and remit this to the DMV. This was changed in 2021 from the CDTFA.
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Question 49 of 81
49. Question
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Never use terms such as “no Down Payment” unless you will sell the vehicle to any purchaser without prior payment of any kind.
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Question 50 of 81
50. Question
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Should you unknowingly sell a stolen vehicle you are required to issue a full refund to the buyer.
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Question 51 of 81
51. Question
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Dealers must finalize a Used Vehicle application within 50 days of the date of sale or 30 days from the date DMV returned the application
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Question 52 of 81
52. Question
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The Dealer must pay the Consignor when they receive the purchase price -or- they execute a Conditional Sales Contract -or- the Purchaser takes delivery of the vehicle.
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Question 53 of 81
53. Question
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Dealers are not allowed to use Coupons or Simulated Checks in an Advertisement.
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Question 54 of 81
54. Question
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It is unlawful for any licensee to allow the use of their Dealer’s license, supplies, or books by any other person for the purpose of permitting that person to engage in the sale of vehicles.
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Question 55 of 81
55. Question
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It is unlawful for any licensed salesperson to perform the sales activities at any location other than the employing Dealer’s licensed location.
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Question 56 of 81
56. Question
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Dealers must notify the DMV when a salesperson had been terminated, within 10 days.
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Question 57 of 81
57. Question
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Dealers must include a calculation of the vehicle’s Net Value including the current market value, the outstanding lien(s), and the value of repairs to be made. The Agreement must also show money due to the Dealer shown as a percent of the selling price, a flat fee, or a specific formula.
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Question 58 of 81
58. Question
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Retail Dealers are required to have a display area at their Place of Business sufficient size to accommodate vehicle(s) of a type for which the dealership is licensed to sell. One parking space is acceptable.
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Question 59 of 81
59. Question
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The Retail Dealer Signage must be:
- Not less than 2 square feet and readable from 50 feet
- Show the Dealer’s name and address
- Permanent, able to withstand weather conditions and erected on the exterior of the office
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Question 60 of 81
60. Question
CorrectIncorrectHint
California Dealers are allowed (not required) to charge a “Document Processing Fee” or “Doc Fee” for processing the Buyer’s vehicle into their name. The State increased the maximum fee to $70 on January 1, 2019. Dealers can charge $85 if they have a contractual agreement with DMV to be a private industry partner pursuant to Section 1685.
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Question 61 of 81
61. Question
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Individuals may not sell any vehicles with the intent to make a profit without a dealer license.
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Question 62 of 81
62. Question
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A special / dealer plate may be used on a vehicle that is owned or lawfully possessed by the dealer (it is in the dealer’s inventory for sale)
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Question 63 of 81
63. Question
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Dealer plates must be securely attached to the rear of the vehicle and should cover or replace the existing license plate.
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Question 64 of 81
64. Question
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The DMV will immediately cancel your license if you abandon your location without notifying them
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Question 65 of 81
65. Question
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When sold, the selling Dealer must complete a Report of Sale, DMV transfer documents and collect fees and taxes as they would with any other vehicle sale to a Consumer.
The Dealer is not required to complete Consignment transfers
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Question 66 of 81
66. Question
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Dealers must withdraw ads within 48 hours when the vehicle has been sold or is no longer for sale.
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Question 67 of 81
67. Question
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A Broker Endorsement is only available to Retail dealers. The Endorsement may be added on the initial application or at any time afterward.
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Question 68 of 81
68. Question
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It is never acceptable for the consumer purchasing the vehicle to perform the smog check. It is always the Dealer’s responsibility.
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Question 69 of 81
69. Question
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California’s Vehicle Code, Division 12 requires that you do not sell or offer for sale a vehicle unless all of its safety equipment is in proper working condition.
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Question 70 of 81
70. Question
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Dealers must renew their license every year and attend an approved Continuing Education Program every two years.
Expired Dealers may renew during a “30-day grace period” and must pay a penalty equal to the original application amount ($175).
The license will be automatically canceled on the 30th day.
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Question 71 of 81
71. Question
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Dealers are required to complete a “Continuing Education” course every two years from a DMV Approved Provider such as Dealer 101.
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Question 72 of 81
72. Question
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A Fictitious Name filing is required when:
- When applying as a Corporation or LLC and not using the exact Corporation or LLC name on the DMV Dealer Application
- When applying as an Individual and your Surname (last name) is not included in the business name on the DMV Dealer Application
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Question 73 of 81
73. Question
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If the vehicle is, or was, salvage, or the title contains a brand, the Dealer must display a red Warning Sticker.
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Question 74 of 81
74. Question
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The Automobile Sales and Finance Act separately requires dealers to retain documents related to vehicle sales for at least seven years or the duration of the contract, whichever is greater. (California Civil Code section 2984.5.)
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Question 75 of 81
75. Question
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A registration fee, California Highway Patrol fee, Vehicle License Fee (.65% of vehicle value), and county/district fees are due for most vehicles registered for on-highway use.
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Question 76 of 81
76. Question
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The most common DMV transfer fee is $15.
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Question 77 of 81
77. Question
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Pursuant to California Vehicle Code (CVC) §11704 (b); upon receipt of an application for a license which is accompanied by the appropriate fee, the department shall, within 120 days, make a thorough investigation of the information contained in the application.
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Question 78 of 81
78. Question
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Deceased Dealers & Surviving Spouses
When a Dealer is deceased, the DMV may issue a “Certificate of Convenience” to the estate’s executor, executrix, administrator, or administratrix, allowing the use of valid, special plates and Dealer License. If none has been appointed, the surviving spouse or other heir can be entitled to conduct the business of the deceased, permitting such person to exercise the privileges granted by such special plates and license for a period of one year from and after the date of death and necessary one-year renewals thereafter.
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Question 79 of 81
79. Question
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The California Vehicle Code is informally referred to as the Veh. Code or the CVC is the section of the California Codes that contains almost all statutes relating to the operation, ownership, and registration of vehicles in California.
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Question 80 of 81
80. Question
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It costs less to Renew a Dealer license than it does to Apply.
- $125 renewal application fee
- $92 fee for each dealer plate*
- $94 fee for each motorcycle plate*
- $75 autobroker endorsement fee
*Plus county fees, if applicable
The cost to Apply for a License is:
- $175 renewal application fee
- $92 fee for each dealer plate*
- $94 fee for each motorcycle plate*
- $100 autobroker endorsement fee
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Question 81 of 81
81. Question
CorrectIncorrectHint
The DMV Occupational License office will require your name on your Certificate to match your driver’s license. If it doesn’t match, they will reject it and not allow you to take the Dealer Test.
You will be charged a service fee if a new replacement Certificate is needed.