Kentucky Car Dealer Bonds
Kentucky motor vehicle dealers, new recreational vehicle dealers, motor vehicle auction dealers, and wholesalers may be required to carry a bond. The amount of the bond will be no less than $15,000 and no greater than $100,000.
The Motor Vehicle Commission (MVC) will determine whether you need a bond and in what amount when checking your financial statement during the application process. Auction dealers may have a bond limit higher than $100,000 based on the decision of the MVC.
Why are Bonds Required in Kentucky?
One of the requirements of receiving a motor vehicle dealer license is providing coverage for your actions, either in a bond or insurance policy. A bond will protect customers from unlawful practices that result in monetary loss. Practices such as not delivering a title or purposefully withholding information about an issue on a vehicle are some of the acts that are protected by the bond. However, any pay outs made by the bond must be reimbursed by the dealer.
Pricing of Auto Dealer Bonds.
With a bond, you are able to pay a small amount of your bond requirement and still be fully covered. If you follow the law, you will not have to pay anything past what you pay up front to receive your bond.
One of the biggest factors of the bond rate is the bond requirement, which is dependent on what the MVC assigns to you. If you are required to have the minimum $15,000 bond, your rate could be as low as a monthly cost of $10. For the same amount, you can choose a yearly cost of $100.
|Price Tier*||Used / Franchise
|Monthly | Annual|
|Preferred||$10 | $100|
|Standard||$19 | $225|
|Credit Repair||$38 | $450|
*Bond rates shown are for a $15,000 bond. These rates are not a guarantee, as pricing is dependent on the dealership owner’s personal credit. Rates also vary depending on the bond limit.
Dealer License Information.
All Kentucky dealer licenses must have the following:
- Established place of business, with an office and display lot
- Certificate of Insurance with garage liability coverage minimums of $250,000 per person, $500,000 per occurrence, and $250,000 for property damage. Automotive recyclers must have a commercial general liability policy in the same amounts
- Business name that specifies nature of business
- Licensed sales personnel
- Business sign visible from main road showing exact name with letters at least 9” in height
- Separation of dealership from other businesses at same location- distinct area for a display lot or customer parking
The application must be filled out and submitted to the MVC 10 working days BEFORE the monthly Commission meeting, held on the 2nd Friday of each month. Any fees should be included with application, such as $40 for application and $20 for each owner. Checks payable to “Kentucky State Treasurer”.
Where to Apply for a Car Dealer Bond.
Bonds can be applied for through our quick online application. Clicking Apply Now below will get you right into the application. Once the information is submitted, Jet works to deliver a competitive price within 24 hours of receival.
|Application for KY Dealer Bond|
|Motor Vehicle Dealer Bond|
Additional License Information.
All dealers must comply with the requirements stated above but some dealers have further specifications.
- Wholesale dealers do not need a business sign
- New franchised dealers must send in a copy of all franchise agreements and include a facility for vehicle service
- Auction dealers may need a bond in an amount set by the MVC, could be upwards of $100,000
- Restricted dealers/mobility applicants must have a business asset net worth of at least $100,000 and at least $1,000,000 in garage liability insurance coverage
- Restricted/automotive recycling applicants are to have a commercial general liability coverage policy instead of garage liability. They must also include zoning proof and a permit to run a salvage/recycling yard or state the reason why it’s not required.
How Do Dealers Apply for a Car Dealer Bond?
If a bond is required, it must be in effect during the entire licensure period. The bond will remain in effect until it is cancelled, such as from lack of payment.
Dealer licenses expire December 31st each year. Renewals must be done online through the MVC website and can be started as early as October 1st.