Prepare for your Car Dealer License exam with these practice questions and answers. This guide covers DMV regulations, vehicle sales laws, title transfer, and dealer bond requirements.
Q: The National Motor Vehicle Title Information System requires which of the following?a. All warranty agreements be sent to DMVb. All vehicles have a Car Faxc. A red warning decal be placed on vehicles with branded titlesd. Both A and B
Answer: c. A red warning decal be placed on vehicles with branded titles
Q: When a dealer sells a vehicle that was consigned to them to sell, they must:a. Provide the seller an accounting and payment within 20 days of the saleb. Test drive it before agreeing to sell itc. Provide a warrantyd. None of the above
Answer: a. Provide the seller an accounting and payment within 29 days of the sale.
Q: Which of the following are permitted methods for computing interest rate?a. The Pre-Computed Basis Methodb. The Simple Interest Basis Methodc. The Friedman Methodd. Both A and B
Answer: d. Both A and B
Q: What is the maximum a dealer may charge a customer for a smog test?
Answer: $50.00
Q: What is the basic DMV transfer fee to transfer the title into the buyer’s name?
Answer: $15.00
Q: If the buyer defaults on a Conditional Sales Contract, the dealer may, subject to proper notification to the buyer:a. Accelerate the amount dob. Repossess vehiclec. Sell the vehicled. All of the above
Answer: d. All of the above
Q: Which of the following are taxable in a vehicle sales transaction?a. Document preparation feeb. $50 smog fee paid to seller/dealerc. Both A and Bd. Insurance fees
Answer: c. Both A and B
Q: Which of the following are not taxable in a vehicle sales transaction?a. Finance chargesb. Insurance chargesc. Smog certificate fee (paid to state)d. All of the above
Answer: d. All of the above
Q: Buy Here Pay Here (self-financing) Dealers must:a. Charge interest rates that are less than 20% above prime rateb. Offer 30 day, or 1,000 mile warranties, and put FMV notices on their vehiclesc. Send 50% of all interest charged to DMVd. Finance all vehicles sold for more than $50,000
Answer: b. Offer a 30 day, or 1,000 mile warranties, and put FMV notices on their vehicles
Q: Which of the following is required Safety Equipment item?a. Padded dashboardsb. Smog Equipmentc. Door locksd. Reclining seatbacks
Answer: b. Smog Equipment
Q: Advertisements must identify the dealer by which of the following?a. Phone numberb. The dealership namec. “dlr”d. “Dealer”
Answer: b. The dealership name
Q: If a a vehicle has been sold, any advertising on that vehicle must be withdrawn within how long?
Answer: 48 hours
Q: If a dealer buys a vehicle with an odometer that is not working the dealer must:a. Tell the buyer that the odometer is brokenb. Repair the odometer before selling the vehiclec Sign a declaration the odometer is not operating to be filed with the DMVd. Do nothing
Answer: b. Repair the odometer before selling the vehicle
Q: Where the dealer repairs an odometer, and the odometer is incapable of registering the same mileage as before service, the dealer must:a. Set the odometer to zerob. Attach a written notice to the left doorframe specifying the previous mileage and date of repairc. Estimate mileage and set the odometer to the mileaged. Both A and B
Answer: d. Both A and B
Q: Is it ever legal for a dealer to reset, or “roll bak” an odometer to show less that the actual mileage?
Answer: NO
Q: DMV requires Special Plates (dealer plates) be placed where on the vehicle?
Answer: In the rear, over the existing license plate.
Q: Auto-brokers must do which of the following:a. Limit deposits to 2.5% of the purchase price, and put all deposits in a separate trust accountb. Use any deposits received to pay the broker
Answer: a. Limit deposits to 2.5% of the purchase price and put all deposits in a separate trust account
Q: Which of the following is not required to transfer a vehicle?a. Endorsed Certificate of Ownershipb. A report of prior service records for the vehicle since newc. Odometer mileage readingd. Smog Certificate
Answer: b. A report of prior service records for the vehicle since new
Q: Which of the following must sign the Certificate of Ownership?a. The legal ownerb. The registered ownerc. The transfereed. All of the above
Answer: The legal owner, the registered owner, and the transferee.
Q: Registration fees are due at the time of retail sale where …
Answer: The registration will expire within 30 days of the date of sale OR the registration has already expired.
Q: If the registration of a vehicle expires while a vehicle is in the dealer’s inventory, is the dealer responsible for paying late registration penalties?
Answer: No
Q: A dealer shall submit a registration application and fees to DMV within how many days of the date of sale?
Answer: 30 days
Q: Why is an Administrative Service Fee is imposed?
Answer: Failing to notify DMV of a sale within 5 calendar days of the date of sale.Failing to attach a copy of the Temporary Identification Form on the vehicle.Failing to correct a returned application for registration within 50 days of the sale date.
Q: California registration fees are not due if the buyer is not from California, the vehicle will not be registered in California, and what other circumstance?
Answer: The vehicle is driven only outside of California after the sale by the buyer with a DMV One Trip Permit.
Q: When is a branch license required?
Answer: When vehicles are ACTUALLY SOLD at a permanent location beyond 1000 ft from the dealer’s main location.
Q: Special Plates may property be used:a. On a dealer’s work or service vehicle routinely used to get parts or to service vehiclesb. By employees during the course and scope of their employmentc. By a prospective customer for 30 days
Answer: b. By employees during the course and cope of their empoyment
Q: Which of the following is a correct statement concerning the use of special plates?a. Special plates do not require a copy of their registration certificates to be kept with them.b. Special plates may be used for towing or transporting other vehicles in limited circumstances.c. Special plates may be used on a vehicle by a buyer after the buyer has purchased and taken deliver of a vehicle.
Answer: b.
Q: A dealer must not:a. Lend a special plate, or dealership license to another person to engage in the purchase or sale of vehicles.b. Employ unlicensed salespersonsc. Pay “Bird Dog” fees to any unlicensed person to obtain sales.d. All of the above
Answer: d.
Q: Who is required to have a salesperson license?
Answer: All managers
Q: When does a vehicle not require a smog inspection?
Answer: The vehicle is sold at wholesale between dealers.
Q: What is the maximum a dealer may charge a buyer for smog testing a vehicle?
Answer: $50.00
Q: Within how many days must a dealer provide DMV the “Used Vehicle Dealer Notice”?
Answer: 5 days
Q: Within how many days must a dealer submit an application for registration or transfer of registration of a vehicle?
Answer: 30 days
Q: To obtain a dealer license, you must obtain a surety bond for what amount?
Answer: $50,000
Q: How long is an occupational license valid for?
Answer: 2 years
Q: Failure to renew the dealership license by the expiration date results in:
Answer: Cancellations of the license after a 30 day extension period AND late penalties if the license is renewed during the 30 day extension period.
Q: All dealers must have a display area except:
Answer: Wholesale dealers
Q: A dealer’s office must have all of the following characteristics EXCEPT:a. A direct entrance into the office from the exterior of the buildingb. Must not be temporary or transitoryc. Must contain the books and records of the businessd. Must be at least 1000 feet from any other auto dealership
Answer: d. Must be at least 1000 feet from any other auto dealership
Q: The dealership display area must:a. At least twice the size of the dealership office.b. For the exclusive use of the dealer for display purposes only.c. Within 1000 feet of the dealership officed. Both B and C
Answer: d. Both B and C
Q: Which of the following are required for dealership signs?a. Each retail dealership must have a sign not less than 2 feet square that can be read from 50 feet away.b. Each sign must be posted at three locations at the dealership.c. Each sign must be lighted and/or viewable at night from a distanced. Both A and B
Answer: a. Each retail dealership must have a sign that is 2 ft by 2 ft
Q: What must a dealer post at every business location?
Answer: Each salesperson’s license and the Dealer license
Q: Automatic cancellation of a dealer’s license will occur upon the happening of which event?a. Failure to maintain adequate bond.b. Getting suedc. A buyer complaining to DMV about your dealership activitiesd. Both A and C
Answer: Failure to maintain adequate bond
Q: What must the dealer attach to every used vehicle offered for sale?
Answer: Federal Trade Commission Buyers Guide
Q: Where can the rules for dealer licensing be found?
Answer: The California Vehicle Code
Q: What must a dealer disclose before a sale?
Answer: Publicly owner vehiclesRental carsTaxi cabs
Q: Where can a dealer get an emergency supply of Report of Sale forms?
Answer: The dealer’s DMV INSPECTOR
Q: What must a dealer do when selling a Lemon Law Buyback vehicle?
Answer: Provide the buyer a disclosure statement to be signed by the buyer AND Affix a decal to the left front doorframe inscribing “Lemon Law Buyback”
Q: What must a dealer offer a customer when selling vehicles for less than $40,000.00?
Answer: Contract Cancellation agreement allowing the buyer to return the vehicle within 2 days.
Q: A dealer must:a. Display each salesperson license at the dealershipb. Employ two or more salespersons per dealershipc. Register all employees with DMVd. None of the above
Answer: a. Display each salesperson license at the dealership
Q: How many vehicles can a private party buy and sell for profit in a year without a dealer license?
Answer: ZERO