California DMV Dealer License Exam - Complete
Questions with Verified Answers Latest Test
(Updated 2026/2027) | Questions with Detailed
Answers | Graded A+
Question 1
A dealer's license and special plates shall be automatically canceled if:
Answer: The dealer abandons the established place of business, The dealer fails to
maintain an adequate bond, and The CDTFA resale permit is suspended ✔✔
Rationale: Under California Vehicle Code, a dealer's license and special plates are
automatically canceled if the dealer abandons their place of business, fails to maintain
the required bond, or has their CDTFA (California Department of Tax and Fee
Administration) resale permit suspended.
Question 2
A dealer must affix to all vehicles offered for sale:
Answer: A Federal Trade Commission Buyers Guide ✔✔
Rationale: The FTC requires that a Buyers Guide be affixed to all used vehicles offered
for sale. This guide provides important information about warranty coverage and the
vehicle's "as-is" or warranty status.
Question 3
Every retail dealer shall have a sign erected or posted at his place of business. The sign
shall have a total size of not less than:
Answer: Two square feet ✔✔
Rationale: California law requires that every retail dealer have a sign of at least two
square feet posted at the place of business, displaying the dealer's name and address.
Question 4
pg. 1
,Each retail dealer is required to maintain a proper display area:
Answer: At all times ✔✔
Rationale: Dealers must maintain a proper display area at all times to demonstrate
they are actively engaged in the business of selling vehicles.
Question 5
Signs on all vehicles indicating the main location address:
Answer: Are required on all vehicles displayed for sale ✔✔
Rationale: All vehicles on the display lot must have signs indicating the dealer's main
location address to ensure customers know which dealer is offering the vehicle for sale.
Question 6
A licensed dealer location must have all of the following:
Answer: An office for the exclusive use of the dealer, A Sign indicating the name and
address of the dealer, and A Display area large enough to display the types of vehicles
sold ✔✔
Rationale: California Vehicle Code requires dealers to have an office exclusively for the
dealer's use, a sign showing the dealer's name and address, and an adequate display area
for the types of vehicles being sold.
Question 7
Should the dealer change the site or location of his established place of business, he
shall notify the department:
Answer: In writing at least 10 days prior to the move ✔✔
Rationale: Dealers must provide written notice to the DMV at least 10 days before
changing their business location to allow the department to update records and conduct
inspections if needed.
Question 8
The basic fee for transfer of ownership on a California registered vehicle is:
Answer: $15 ✔✔
pg. 2
,Rationale: The basic California vehicle transfer fee is $15, which is required when
ownership of a California registered vehicle is transferred.
Question 9
Any dealer who sells a vehicle when the title is branded "Lemon":
Answer: Must disclose the Lemon Law buyback status prior to the sale of the vehicle
✔✔
Rationale: Under California law, dealers must disclose to buyers that a vehicle has a
"Lemon Law buyback" or "manufacturer buyback" title before the sale, and they are
required to provide a disclosure notice.
Question 10
It is legal to reset the odometer reading on a vehicle:
Answer: It is never legal to reset the odometer reading ✔✔
Rationale: Under federal law (Federal Odometer Act) and California law, it is never
legal to reset, alter, or disconnect an odometer with the intent to change the mileage
reading.
Question 11
A dealer MUST withdraw any advertisement of a vehicle that has been sold within:
Answer: 48 hours of the sale (2 business days) ✔✔
Rationale: Dealers must remove advertisements for sold vehicles within 48 hours to
prevent consumers from being misled by ads for unavailable vehicles.
Question 12
A dealer may generate an electronic report of sale book to:
Answer: It is never legal to generate a report of sale book to anyone ✔✔
Rationale: The Report of Sale (ROS) is a DMV document that must be used in its
original format. Electronic generation of ROS books is not permitted.
Question 13
pg. 3
, An auto broker must also be licensed as a:
Answer: Retail dealer ✔✔
Rationale: An auto broker must hold a retail dealer license in California because they
facilitate vehicle sales to consumers and must comply with dealer regulations.
Question 14
A conditional sales contract is:
Answer: An agreement between the buyer and dealer for payments ✔✔
Rationale: A conditional sales contract is an agreement where the buyer takes
possession of the vehicle but the dealer retains title until the buyer completes the
payments.
Question 15
If a dealer accepts a vehicle as a trade-in if it is stolen, which of the following will
happen?
Answer: The vehicle is returned to the rightful owner ✔✔
Rationale: If a dealer accepts a stolen vehicle as a trade-in, the vehicle must be
returned to its rightful owner. The dealer may suffer financial loss as a result.
Question 16
Licensing requirements for a dealer's license in California are from:
Answer: The Vehicle Code ✔✔
Rationale: California dealer licensing requirements are established in the California
Vehicle Code, specifically Division 5 (Occupational Licensing).
Question 17
A dealer must include in all advertisements all of the following except:
Answer: The color of the vehicle ✔✔
Rationale: While vehicle advertisements must include the total price, make, and
VIN/license plate number, the vehicle color is not a required element of a dealer
advertisement.
pg. 4
Questions with Verified Answers Latest Test
(Updated 2026/2027) | Questions with Detailed
Answers | Graded A+
Question 1
A dealer's license and special plates shall be automatically canceled if:
Answer: The dealer abandons the established place of business, The dealer fails to
maintain an adequate bond, and The CDTFA resale permit is suspended ✔✔
Rationale: Under California Vehicle Code, a dealer's license and special plates are
automatically canceled if the dealer abandons their place of business, fails to maintain
the required bond, or has their CDTFA (California Department of Tax and Fee
Administration) resale permit suspended.
Question 2
A dealer must affix to all vehicles offered for sale:
Answer: A Federal Trade Commission Buyers Guide ✔✔
Rationale: The FTC requires that a Buyers Guide be affixed to all used vehicles offered
for sale. This guide provides important information about warranty coverage and the
vehicle's "as-is" or warranty status.
Question 3
Every retail dealer shall have a sign erected or posted at his place of business. The sign
shall have a total size of not less than:
Answer: Two square feet ✔✔
Rationale: California law requires that every retail dealer have a sign of at least two
square feet posted at the place of business, displaying the dealer's name and address.
Question 4
pg. 1
,Each retail dealer is required to maintain a proper display area:
Answer: At all times ✔✔
Rationale: Dealers must maintain a proper display area at all times to demonstrate
they are actively engaged in the business of selling vehicles.
Question 5
Signs on all vehicles indicating the main location address:
Answer: Are required on all vehicles displayed for sale ✔✔
Rationale: All vehicles on the display lot must have signs indicating the dealer's main
location address to ensure customers know which dealer is offering the vehicle for sale.
Question 6
A licensed dealer location must have all of the following:
Answer: An office for the exclusive use of the dealer, A Sign indicating the name and
address of the dealer, and A Display area large enough to display the types of vehicles
sold ✔✔
Rationale: California Vehicle Code requires dealers to have an office exclusively for the
dealer's use, a sign showing the dealer's name and address, and an adequate display area
for the types of vehicles being sold.
Question 7
Should the dealer change the site or location of his established place of business, he
shall notify the department:
Answer: In writing at least 10 days prior to the move ✔✔
Rationale: Dealers must provide written notice to the DMV at least 10 days before
changing their business location to allow the department to update records and conduct
inspections if needed.
Question 8
The basic fee for transfer of ownership on a California registered vehicle is:
Answer: $15 ✔✔
pg. 2
,Rationale: The basic California vehicle transfer fee is $15, which is required when
ownership of a California registered vehicle is transferred.
Question 9
Any dealer who sells a vehicle when the title is branded "Lemon":
Answer: Must disclose the Lemon Law buyback status prior to the sale of the vehicle
✔✔
Rationale: Under California law, dealers must disclose to buyers that a vehicle has a
"Lemon Law buyback" or "manufacturer buyback" title before the sale, and they are
required to provide a disclosure notice.
Question 10
It is legal to reset the odometer reading on a vehicle:
Answer: It is never legal to reset the odometer reading ✔✔
Rationale: Under federal law (Federal Odometer Act) and California law, it is never
legal to reset, alter, or disconnect an odometer with the intent to change the mileage
reading.
Question 11
A dealer MUST withdraw any advertisement of a vehicle that has been sold within:
Answer: 48 hours of the sale (2 business days) ✔✔
Rationale: Dealers must remove advertisements for sold vehicles within 48 hours to
prevent consumers from being misled by ads for unavailable vehicles.
Question 12
A dealer may generate an electronic report of sale book to:
Answer: It is never legal to generate a report of sale book to anyone ✔✔
Rationale: The Report of Sale (ROS) is a DMV document that must be used in its
original format. Electronic generation of ROS books is not permitted.
Question 13
pg. 3
, An auto broker must also be licensed as a:
Answer: Retail dealer ✔✔
Rationale: An auto broker must hold a retail dealer license in California because they
facilitate vehicle sales to consumers and must comply with dealer regulations.
Question 14
A conditional sales contract is:
Answer: An agreement between the buyer and dealer for payments ✔✔
Rationale: A conditional sales contract is an agreement where the buyer takes
possession of the vehicle but the dealer retains title until the buyer completes the
payments.
Question 15
If a dealer accepts a vehicle as a trade-in if it is stolen, which of the following will
happen?
Answer: The vehicle is returned to the rightful owner ✔✔
Rationale: If a dealer accepts a stolen vehicle as a trade-in, the vehicle must be
returned to its rightful owner. The dealer may suffer financial loss as a result.
Question 16
Licensing requirements for a dealer's license in California are from:
Answer: The Vehicle Code ✔✔
Rationale: California dealer licensing requirements are established in the California
Vehicle Code, specifically Division 5 (Occupational Licensing).
Question 17
A dealer must include in all advertisements all of the following except:
Answer: The color of the vehicle ✔✔
Rationale: While vehicle advertisements must include the total price, make, and
VIN/license plate number, the vehicle color is not a required element of a dealer
advertisement.
pg. 4
