Alabama Auto Dealer Bond

As of October 1, 2020, auto dealers in Alabama are required by the Motor Vehicle Division of the Department of Revenue (DOR) to hold a $50,000 surety bond. Jet provides the bond as a guarantee to the DOR and the public that recompense will be available should they receive financial damage due to the dealer’s negligent or fraudulent actions. New vehicle dealers, used vehicle dealers, rebuilders, and wholesalers must secure the Auto Dealer Bond to receive and maintain the new Master Dealer License.

PURCHASE AUTO DEALER BOND

Recent legislation increased the bond amount from $25,000 to $50,000 to allow a larger reimbursement amount for those harmed by a dealer’s actions. Curbstoning, or “curbing”, is one of those actions which occurs when a dealer acts as a private seller to illegally rid of malfunctioning vehicles. In the past, financial damage caused by curbing often surpassed the full bond amount of $25,000, therefore the bond limit was increased to allow for greater restitution.

What's the Lowest Price for the Alabama Auto Dealer Bond?

Jet’s lowest price for the $50,000 Auto Dealer Bond is $25 monthly or $250 for annually. The price of the bond is determined by a soft credit check of the dealership owner and the number of years in business. Refer to the chart below which shows different pricing for preferred credit rates.

Bond TermAnnual Price
1 Year$250
2 Years$438
3 Years$625
 

Jet provides affordable pricing options for everyone. Our monthly payment plan allows you to pay only a small portion of the bond premium each month especially with a larger bonding amount required.

What Is the Purpose of the Auto Dealer Bond?

Motor Vehicle Dealer Bonds act as a guarantee that financial harm caused by the dealer’s actions are resolved with limited to no damage to the public. The Motor Vehicle Division of the Department of Revenue is tasked with preventing fraud related to transportation businesses in Alabama. The bond is essential in the DOR’s goal by supplying reimbursement for those who have incurred losses due to a dealer’s actions, such as selling a vehicle without a title or failure to pay taxes to the DOR. 

How Does the Application Process Work With Jet?

It’s simple! Jet’s application is a step-by-step process that only asks for basic information and can be completed in just minutes. Provide your business information and social security number for the soft credit check. Once the application is complete, Jet will provide you with a rate that will be available for online purchase. You will receive an electronic copy for your records.

How Does the Bond Get Filed to the Alabama Department of Revenue?

After you provide payment Jet signs and seals the bond and files the original with the DOR. Prior to sending it to the DOR, it’s important to make sure the correct information is on the bond form, especially for new dealer applicants. Below is what is required on the bond form for various business types:

Entity TypeInformationExample
IndividualApplicant's name and business nameJan Smith, DBA Jan’s Cars
PartnershipNames of partners & partnership nameJan Smith & Andy Brown, DBA J&A Autos
Limited Liability Company (LLC)Legal name of businessJan’s Cars, LLC
CorporationCorporation nameJan’s Cars, Inc.

Businesses must have signatures from the individual applicant, all LLC members, all partners, or a corporate officer. All required documentation should be sent to the following address:

Alabama Department of Revenue
Motor Vehicle Division
P.O. Box 327643
Montgomery, AL 36132-7643

Can I Cancel My Bond and Get a Refund?

Yes! Jet allows you to cancel the bond at any time. Just send us a request via mail or email. Jet must then provide the DOR with a 60-day written cancellation notice. After the 60 days, a refund will be calculated for bonds purchased on annual terms. If that’s the case, Jet will evaluate how much time is remaining on the bond and refund you any unused premium. For those paying on a monthly basis, the payments will stop after the 60-day period.

Jet can request cancellation with the DOR for non-payment of the bond. Remember, without a bond you are unable to be licensed as an auto dealer in Alabama.

How to Renew the Alabama Auto Dealer Bond in Alabama

Motor Vehicle Dealer Bonds are continuous until cancelled, meaning as long as you make payment the bond will stay active. Jet offers the bond in monthly installments in addition to one-, two-, and three-year term options.

If you choose monthly payments, there is no renewal needed! The payments will continue to come out of your preferred account until cancellation is requested.

If you pay for the bond in full at the time of purchase, Jet will send out a renewal notice via mail and email prior to the bond’s renewal date. No additional paperwork is needed, just provide payment and Jet takes care of the rest!

How Does a Principal Avoid Bond Claims?

Auto dealers must comply with Alabama House Bill 393, which updated multiple details and regulations of Code of Alabama 1975.

Dealer’s customers and the Department of Revenue can bring a complaint against the dealership for improper licensing practices. Dealers should avoid prohibited acts by operating in an honest and thorough manner. Actions that could lead to penalties include, but are not limited to:

Failure to abide by the laws put in place by the DOR can result in the dealer receiving a Class A misdemeanor and various civil fines. It is in the best interest of the dealership owner(s) to appropriately reimburse any harmed parties prior to them pursuing a claim on the bond. The DOR can file a claim after an investigation and the public can file a claim on the bond after receiving final judgement from a court.

The DOR has jurisdiction to revoke or suspend the master dealer license at any time if the dealer does not comply with regulations and refuses to pay penalties inflicted upon them.

What Happens If I Get a Bond Claim?

Upon a claim being filed by the Department of Revenue, Jet has 30 days to conduct an investigation. The DOR provides us with all supporting documentation and Jet will request that the dealership provide any documentation they have regarding the case. Jet works to protect its customers from faulty claims, which is why additional documentation may be requested during the investigation. It is important for the motor vehicle dealer to be responsive during this process.

If Jet finds a claim legitimate, we will provide payment to the claimant for the claim amount, up to the full bond limit. It is then the dealer’s responsibility to reimburse Jet. The bond acts as an extension of credit and the dealer is ultimately liable for their original actions. By paying back a claim right away Jet is able to restore the bond and the dealership may continue business practices. Failure to pay the Surety (Jet) back can result in difficulties obtaining the surety bond and license needed to operate a dealership in Alabama.

 

Alabama Auto Dealer Bond Form