Motor Vehicle Division FREE Motor Vehicle Division Dealer Operations and Compliance Questions and Answers 2 — Questions and Answers
Question 1: What is the primary purpose of a surety bond requirement for motor vehicle dealers?
- To protect consumers from dealer fraud or failure to deliver title (Correct answer)
- To guarantee the dealer will sell a minimum number of vehicles
- To cover the dealer's property insurance costs
- To ensure the dealer pays federal income taxes
Correct answer: To protect consumers from dealer fraud or failure to deliver title
A surety bond protects consumers by providing financial recourse if a dealer engages in fraud or fails to transfer a vehicle title.
Question 2: A dealer discovers that a vehicle on their lot has an undisclosed salvage title. What is the dealer legally required to do before selling it?
- Disclose the salvage title status to the buyer in writing before the sale (Correct answer)
- Repair the vehicle and have the salvage brand removed
- Return the vehicle to the auction where it was purchased
- Sell the vehicle only to another licensed dealer
Correct answer: Disclose the salvage title status to the buyer in writing before the sale
Dealers must provide written disclosure of any salvage or rebuilt title brand to prospective buyers before completing a sale.
Question 3: Which record must a licensed dealer maintain for every vehicle acquired for resale?
- A police vehicle identification number inspection report
- A stock book or inventory log showing acquisition and disposal details (Correct answer)
- A consumer satisfaction survey from the previous owner
- A manufacturer's certificate of roadworthiness
Correct answer: A stock book or inventory log showing acquisition and disposal details
Dealers must maintain a stock book or equivalent record documenting how each vehicle was acquired, from whom, and how it was disposed of.
Question 4: What typically happens if a dealer fails to submit title and registration paperwork to the MVD within the required timeframe after a sale?
- The sale is automatically voided
- The dealer may face fines, penalties, or license suspension (Correct answer)
- The buyer's insurance is canceled
- The vehicle is impounded by law enforcement
Correct answer: The dealer may face fines, penalties, or license suspension
Dealers who fail to submit title paperwork within the statutory deadline face administrative penalties including fines and potential license suspension.
Question 5: Under most state MVD regulations, what is required for a dealer to operate from a new or additional location?
- Only a change of address filed with the post office
- A separate dealer license or location approval from the MVD (Correct answer)
- Approval from neighboring business owners
- A new federal employer identification number
Correct answer: A separate dealer license or location approval from the MVD
Each dealership location generally requires its own dealer license or must be separately approved by the MVD before operations begin.
Question 6: A customer purchases a vehicle and the temporary tag expires before they receive permanent plates. Who bears responsibility for the delay?
- The customer, who should have visited the MVD independently
- The dealer, who is responsible for timely processing of title and registration (Correct answer)
- The vehicle manufacturer
- The insurance company
Correct answer: The dealer, who is responsible for timely processing of title and registration
The dealer is responsible for processing title and registration documents in a timely manner, and delays that cause temporary tags to expire typically fall on the dealer.
Motor Vehicle Division FREE Motor Vehicle Division Dealer Operations and Compliance Questions and Answers 2
What is the primary purpose of a surety bond requirement for motor vehicle dealers?