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Colorado Motor Vehicle Dealer Bonds

What is a Colorado Motor Vehicle Dealer Bond?

Colorado requires all motor vehicle dealers and power sport dealers to purchase a surety bond called an auto dealer bond.

An auto dealer bond (surety bond) is a type of insurance contract required by the Colorado Motor Vehicle Dealer Board to complete licensing. This insurance contract is a guarantee you'll follow all dealership laws and provide residents of Colorado with honest and ethical dealership services.

When you purchase this auto dealer surety bond, you're making this promise to the Colorado Motor Vehicle Dealer Board and to your customers.

Get Your Colorado Motor Vehicle Dealer Bond

Used Motor Vehicle Dealer Bond

$50,000 Bond

Wholesaler Bond

$50,000 Bond

Wholesale Motor Vehicle Auction Bond

$50,000 Bond

Powersports Vehicle Dealer Bond

$50,000 Bond

Motor Vehicle Salesperson Bond

$15,000 Bond

1-Year Bond

New Motor Vehicle Franchise Dealer Bond

$50,000 Bond

Motor Vehicle Buyer Agent Bond

$5,000 Bond

1-Year Bond

Small Trailer Dealer Bond - weighing < 2,000 pounds

$5,000 Bond

1-Year Bond

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Colorado requires every license classification to purchase an auto dealer bond:

  • New (franchise) dealers
  • Used vehicle dealers
  • Wholesalers
  • Wholesale auction dealers
  • Powersport vehicle dealers
  • Used powersport dealers
  • Powersport wholesales

The auto dealer bond amount is $50,000 for all of these licenses.

If you're a dealer of small trailers, weighing less than 2,000 pounds, your bond amount is only $5,000.

Why is a Colorado Motor Vehicle Dealer Bond Required?

The Colorado Motor Vehicle Dealer Board requires all dealerships to obtain a license in order to legally sell vehicles in the state. This licensing requirement ensures:

  • The proper education is achieved
  • A decent level of experience is obtained
  • The proper business records are submitted
  • Consistency in the industry

And one of the licensing requirements is the $50,000 auto dealer surety bond.

As we've mentioned above, this surety bond is a guarantee that you will follow all licensing laws in Colorado and serve your customers with good business practices and ethics.

What Does a Colorado Auto Dealer Bond Protect Against?

There will always be some dealerships that try to cut corners to increase profits or even steal money.

These fraudulent actions of misconduct include:

  • Improperly transferring on title
  • Selling vehicles with no title or fake titles
  • Lying about vehicle condition, accident history, or milage
  • Stealing from customer deposits
  • Failing to record all vehicle sales or failing to pay the correct amount of sales tax

If a dealership is found guilty of any of these types. of actions, a claim can be made against the dealer bond for financial recourse.

The limit of financial remedy is only $50,000, the amount of the surety bond.

How Much Does a Colorado Auto Dealer Bond Cost?

The cost of the $50,000 Colorado auto dealer bond is based on a rate quoted by a surety.

The surety is an insurance company that underwrites the surety bond. And like any insurance company, the rates they charge are based on their own internal assessment.

This assessment is based on 3 factors:

  • Primarily personal credit
  • Dealership experience and industry experience
  • Any prior bond claims if you've had a dealership in the past

Even though each surety uses similar factors, their assessments will vary.

And because rates vary, the final prices can vary too. We've helped customers save hundreds of dollars purchasing a surety bond.

This is why it's important to use a specialized surety agency like Surety Bonds Direct.

We use our network of A rated sureties to price shop for you and find you the lowest possible price. Here's a table showing you examples of pricing for the Colorado $50,000 auto dealer bond.

Bond Amount Surety Bond Rate Price You Pay
$50,000 0.5% $250
$50,000 1% $500
$50,000 2% $1000
$50,000 3% $1,500
$50,000 4% $2,000
$50,000 5% $2,500

But it's important to get your specific pricing and the process is easy to start.

Click here and start the online quote process. It takes 90 seconds to submit your request.

If you prefer to speak with bond specialist, you can call 1-800-608-9950.

Having a bond specialist secure pricing for you costs you nothing and there is zero obligation to purchase the bond once you receive the pricing.

You have nothing to risk by getting a quote . It can save you hundreds of dollars.

What Happens After You Purchase Your Bond?

After you purchase your bond, Surety Bonds Direct's issuing department will prepare your bond with the correct signatures, notarized seals, and the required power of attorney.

You will receive an email of the bond. The Colorado Motor Vehicle Dealer Board will accept a scanned or photocopy of the bond, so email makes the process of getting your bond faster.

Renewing Your Auto Dealer Bond

Colorado dealer bonds expire one year from the active (effective) date of your bond.

Your bond specialist will reach out to you 30 to 45 days in advance of your renewal date to make paying the renewal premium easy.

Once you pay the renewal premium, your bond remains active.

The Colorado Auto Dealer Bond is Continuous

The Colorado auto surety dealer bond is continuous.

A continuous bond means the original bond remains active as long as you pay the renewal premium.

Most of the time, you never have to worry about having a new bond issued or submitting the bond to the Colorado Motor Vehicle Dealer Board.

If we find you lower pricing, we'll get you that bond and in this case you will have to submit the new bond to the Colorado Motor Vehicle Dealer Board.

Motor Vehicle Dealer Bonds And Getting Your Colorado Business License/Registration

If you're applying for your first Colorado dealer license, read our post that outlines the 9 steps getting your Colorado Dealership License.

At a high level the steps are:

  1. Initial requirements to qualify for dealership licensing
  2. Complete the dealership application
  3. Complete the owner addendum
  4. Complete the required education
  5. Purchase the auto dealer bond
  6. Complete the statement of financial condition
  7. Complete all business entity paperwork
  8. Prepare and pass the dealership location requirements

Don't push off getting your auto dealer bond. You don't want this requirement to be the reason you submit your application late.

It takes 1 to 2 business days to have your bond issued and in your inbox.