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Auto Dealer Bonds

A surety bond for auto dealers is one of the first requirements you’ll face when opening a dealership — and one of the most misunderstood. Whether you’re figuring out what it is, comparing costs, or ready to purchase, you’re in the right place.

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It’s easy with our simple 3-step process:

  1. Apply Online
  2. Get Quote
  3. Receive Bond
about bond type

What Is an Auto Dealer Bond?

An auto dealer bond is a surety bond, and a category of license bonds, that motor vehicle dealerships must carry as a condition of their license. It’s a binding agreement among three parties: the seller, the surety company, and the state.

The auto dealer bond exists to protect consumers from fraudulent conduct. If a claim is filed, the surety company pays — but the holder must repay that amount. Unlike an insurance policy, a dealer surety bond protects only the public.

img Who is Considered a “Motor Vehicle Dealer”?

Anyone who sells vehicles for profit as a business is classified as a motor vehicle dealer and required to hold a license. This includes new- and used-car sellers, wholesale and retail dealerships, and, in many states, sellers of motorcycles, RVs, and trailers.

Most states set a threshold: sell more than a set number of cars per year, and you’re legally required to operate under a license, which means motor vehicle dealer bonds apply to you. The exact number varies by state. Those who operate without the required auto dealer bond risk fines, license suspension, and forced shutdown.

img Which States Require Dealers to Purchase an Auto Dealer Bond?

All 50 states and the District of Columbia require dealers to purchase an auto dealer bond. That said, some states require used-car dealerships to carry it, while others extend the requirement to new-vehicle dealers, wholesale sellers, and even motor-vehicle sellers and auction houses. A surety bond for auto dealers is a condition of obtaining and maintaining a license.

Types of Auto Dealer Surety Bonds

What you need depends on the kind of vehicles you sell and how your dealership operates. The most common auto dealer bonds are:

  • New Car — required for franchise dealerships selling new vehicles directly from a manufacturer
  • Used Car — the most widely required type that covers independent used vehicle sellers
  • Wholesale — for sellers who sell only to other dealers
  • Salvage — required in several states for businesses handling total-loss vehicles
  • Motorcycle/RV/Trailer Motor Vehicle — many states treat these as a separate dealer surety bond category with different amounts
costs

How Much Does a Dealer Bond Cost?

Auto dealer bond cost depends on several factors, but your personal credit score is the biggest one. Most dealer surety bond premiums range from 1% to 10% of the total amount. Good credit means a lower percentage — sometimes as little as 1%. Poor credit pushes that rate higher.

Surety protection from a reputable company can still be obtained even with imperfect credit, though you’ll pay more. The premium is what you pay annually — not the full amount.

What are Auto Dealer Bond Requirements By State?

The exact amount and specific requirements for an auto dealer bond vary by state. Different requirements apply depending on seller type, vehicle category, and annual sales volume.

State Key Requirements Official Resource
Arizona Required for each business location azdot.gov
Colorado All motor vehicle sellers dmv.colorado.gov
Florida All motor vehicle and mobile home dealerships flhsmv.gov
Illinois Required for those selling more than 5 vehicles per year ilsos.gov
Indiana All motor vehicle sellers in.gov
Minnesota All licensed car dealerships mn.gov
New Mexico Salvage and mobile home dealerships included mvd.newmexico.gov
South Carolina Amount varies by class dmv.sc.gov
Wisconsin Applies to new/used dealerships and public consignment auction houses wisconsindot.gov
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Choose Bond by States

We proudly serve all 50 states, offering a full range of surety bonds. To buy surety bonds online:

  1. Choose your state
  2. Choose the bond type you need
  3. Apply online to request a free quote

There’s no obligation, and we can often help you get bonded in 24 hours or less.

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step by step guide

Surety Bond for Auto Dealers Online: How to Get an Auto Dealer Bond?

  • Choose Your Bond

    Select the bond you need. We help you find exactly what is required in your state.

  • Submit a Quick Application

    Complete a short online form.

  • Get Approved & Receive Your Dealer Bond

    Get fast approval and receive your bond instantly by email. Your document is ready to use right away.

faq

FAQ

What does the dealer surety bond cover?

A dealer surety bond covers financial losses incurred by customers or the government resulting from fraudulent, unethical, or unlawful conduct. This includes failure to transfer title, sale fraud, and violations of state laws.

What can happen if you are not adequately bonded?

Operating without a valid auto dealer bond can result in license suspension, heavy fines, and forced business closure. You also expose yourself to personal lawsuits from customers with no financial security net.

Do surety companies offer financing on dealer bonds?

Some surety providers do offer payment plans on premiums, allowing sellers to spread the cost over several months.

Is a credit check required to purchase a bond?

Yes, it is one of several factors used to determine your premium rate in auto dealer bonds. Better credit means lower costs, though those with poor credit can still obtain insurance at higher rates.

What information is collected for an auto dealer bond?

Information typically collected includes your full legal name, business address, license number, the amount required by your state, and basic financial details. The surety company uses this and other information to determine eligibility and pricing.

How to file a bond?

Once issued, an auto seller must file the documents with the relevant state DMV or licensing authority, usually by mail or through an online portal.

What can dealers do to avoid claims on their bond?

Comply with all state regulations, maintain accurate records, and never engage in fraudulent sales practices. Responsible business conduct is the most effective way to protect your auto dealer bond.

What is the bond claim process?

A claimant submits a claim to the surety company with supporting documentation. The surety investigates and, if the claim is valid, pays the claimant up to the agreed-upon amount. The dealer must then repay the surety in full.

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Why Work With Us?

Easy Application Process

Simply fill out our convenient online application form to get started.

Extensive Carrier Network

We work with a wide range of carriers to provide many options to our clients.

Competitive Rates

As an independent agency, we can leverage our carrier network to find the most competitive rates for the bonds you need.

Quick Turnarounds

We work to get you bonded as quickly as possible, often in 24 hours or less.

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With 30 years in the surety bond industry, our licensed agents know exactly how to match you with the right bond, fast and hassle-free.

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Testimonials

What our customers say about us

Super easy process. I found the bond I needed in minutes and received the approved document the same day. Great experience overall.

Emily R., Business Owner
Contractor

The application was fast, the support team was responsive, and the pricing was clear. Very smooth and professional. Everything was explained clearly, and I appreciated how quickly I received my bond.

Jason M., Contractor
Small Business Owner

Super easy process. I found the bond I needed in minutes and received the approved document the same day. Great experience overall.

Emily R., Business Owner
Oberman & Oberman

The application was fast, the support team was responsive, and the pricing was clear. Very smooth and professional. Everything was explained clearly, and I appreciated how quickly I received my bond.

Jason M., Contractor
Oberman & Oberman

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