DMV - Representative Dealer-Specific Regulations Questions and Answers — Questions and Answers
Question 1: A customer purchases a used vehicle for $15,000 and buys the optional 2-day contract cancellation agreement. They decide to cancel the contract on the second day. The dealer has a standard restocking fee of $300. How much must the dealer refund to the customer if the customer paid $250 for the cancellation option?
- The full purchase price, sales tax, registration fees, and the trade-in vehicle, but the dealer keeps the $250 option fee. (Correct answer)
- The full purchase price and all fees, including the $250 option fee.
- The purchase price minus the $300 restocking fee.
- The purchase price minus the $250 option fee and the $300 restocking fee.
Correct answer: The full purchase price, sales tax, registration fees, and the trade-in vehicle, but the dealer keeps the $250 option fee.
According to the California Car Buyer's Bill of Rights, if a buyer cancels the contract, the dealer must provide a full refund of the sales tax, registration fees, and any deposit or trade-in vehicle. The fee paid for the contract cancellation option itself is nonrefundable. While a dealer can charge a restocking fee, they must deduct the amount paid for the cancellation option from that fee. In this case, since the $250 option fee is less than the $300 restocking fee, the practical effect is that the dealer retains the $250 and the buyer is not charged an additional restocking amount.
Question 2: A dealer takes a vehicle on consignment from a private party. The vehicle is sold to a customer 15 days after the consignment agreement is signed. According to the California Vehicle Code, what is the maximum time the dealer has to pay the consignor after the date of sale?
- 10 days
- 15 days
- 20 days (Correct answer)
- 30 days
Correct answer: 20 days
California Vehicle Code §11729 requires that a dealer who has sold a consigned vehicle must pay the consignor the agreed-upon amount within 20 days after the date of the sale.
Question 3: Which of the following is a specifically prohibited use of special dealer license plates according to California regulations?
- Towing another vehicle from the dealer's inventory.
- On a service vehicle used to transport parts for the dealership. (Correct answer)
- A 3-day test drive by a prospective buyer.
- Delivering a sold vehicle to the buyer's residence.
Correct answer: On a service vehicle used to transport parts for the dealership.
California Vehicle Code §11715 outlines the permissible uses of special dealer plates. These plates cannot be used on work or service vehicles, such as a parts truck. They are permitted for moving vehicles in the dealer's inventory, including for test drives (up to 7 days), towing other inventory vehicles, and for delivering a vehicle to a buyer.
Question 4: A dealer establishes a branch location to sell vehicles. Which of the following is a requirement for this branch location?
- It must be within a 1,000-foot radius of the main dealership location.
- It must operate under a different business name than the main location.
- It must have its own separate dealer bond.
- It must comply with the same office, display, and signage rules as the main location. (Correct answer)
Correct answer: It must comply with the same office, display, and signage rules as the main location.
A branch location, which is any place other than the principal place of business where a dealer sells vehicles, must generally meet the same requirements as the main dealership. This includes having a proper office, a sufficient display area, and compliant signage.
Question 5: Under the 'Seller's Right to Cancel' clause in a typical retail installment sales contract, a dealer may cancel the sale if they cannot secure financing. Within how many days of the purchase date must the dealer notify the buyer of this cancellation?
- 3 days
- 7 days
- 10 days (Correct answer)
- 14 days
Correct answer: 10 days
If a dealer is unable to assign the financing contract to a lender, they have the right to cancel the sale, but they must notify the buyer of the cancellation within 10 days of the date on the purchase contract. If they fail to do so, the sale is considered final.
Question 6: Regarding business records related to vehicle sales, what is the minimum period a California dealer must retain these documents according to the Automobile Sales and Finance Act?
- 3 years, after which they can be destroyed.
- For 90 days in physical form, then electronically for 5 years.
- For at least seven years, or the duration of the sales contract, whichever is greater. (Correct answer)
- 4 years, to align with CDTFA record-keeping requirements.
Correct answer: For at least seven years, or the duration of the sales contract, whichever is greater.
While DMV regulations require dealers to retain records for three years, the California Automobile Sales and Finance Act has a stricter requirement. It mandates that dealers keep documents related to vehicle sales for a minimum of seven years, or for the entire length of the finance contract if it exceeds seven years.
DMV - Representative Dealer-Specific Regulations Questions and Answers
A customer purchases a used vehicle for $15,000 and buys the optional 2-day contract cancellation agreement.
They decide to cancel the contract on the second day.
The dealer has a standard restocking fee of $300.
How much must the dealer refund to the customer if the customer paid $250 for the cancellation option?