Auto Dealer Bonds

Motor vehicle dealers are legally required to carry an auto dealer bond in the state they do business in prior to becoming licensed and to maintain their active license status. Surety Bond requirements vary from state to state for auto dealers.

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What Is the Purpose of an Auto Dealer Bond?

The main function of an auto dealer bond is to financially protect the public from any auto dealer misconduct. For example, if a car dealer tampers with the odometer prior to selling a vehicle, the customer may file a claim on the bond to be reimbursed for any losses incurred as a result of the dealer’s action.

Types of Auto Dealer Surety Bonds

There are various types of auto dealer bonds. The type of surety bond the dealer needs is dependent on various factors, including the following:

The three main types of auto dealers that require bonds are: used vehicle dealers, franchise (new) vehicle dealers, and wholesale vehicle dealers. There are additional classifications depending on the state, such as: mobile home dealers, autobrokers, motorcycle only dealers and auto recyclers.

How Much Does a Motor Vehicle Dealer Bond Cost?

Dealer bonds typically range in cost from 0.5% to 10% of the bond limit, and are primarily based on the personal credit of the dealership owner, as well as other factors. If a dealer is required to carry a $50,000 bond, and they qualify for the 1% rate, they would pay $500 to be bonded.

States Requiring Bonds

Select a state below to get more information and to apply for an auto dealer bond quote:

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