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New York Motor Vehicle Dealer and Broker Bonds


New York Motor Vehicle Dealer or Broker Bond Information

The New York State Department of Motor Vehicles, per Vehicle and Traffic Law section 415(6-b), requires that motor vehicle dealers secure a surety bond as a condition of the registration certificate.

The amount of the bond, or bond limit, is based on the dealer type and number of vehicles sold. A surety bond in the amount of $50,000 is required of new car dealers. Used car dealers who sold more than 50 vehicles during the previous calendar year must post a $100,000 surety bond. Used car dealers who sold 50 or less vehicles during the previous calendar year must post a $20,000 surety bond. Automobile broker businesses must post $100,000 surety bond.

How Much Does a Motor Vehicle Dealer Bond Cost in New York?

Most Common Bonds

Motor Vehicle Dealer Bond - 50 or less vehicles sold

$20,000 Bond

Motor Vehicle Dealer Bond - more than 50 vehicles sold

$100,000 Bond

Automobile Broker Surety Bond

$100,000 Bond

Additional Bonds

Motor Vehicle Dealer Bond - Dealer of New Vehicles

$50,000 Bond

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What does a Motor Vehicle Dealer Bond Protect Against?

The surety bond protects any person, including the State of New York, who obtains a judgment against the bond principal for an act or omission that violates conditions of the bond. Bond conditions that must be met by the principal include:

  • payment of all checks and other valid bank drafts made by the principal for motor vehicle purchases,
  • good title transfer for each vehicle sold,
  • proper safekeeping and maintenance of customer deposits,
  • payment of any fines imposed by the Commissioner of Motor Vehicles pertaining to the Vehicle and Traffic Law, and
  • repayment of overcharges to customers related to vehicle registration and titling.  

The surety company is liable for total claims against the principal up to the full bond amount. The bond shall continue in full force until canceled by the surety company by providing 60 days written notice to the New York State Commissioner of Motor Vehicles.

Getting Your New York Business License or Registration

  1. Complete Original Facility Application (Form VS-1D).
  2. Proof of business name if dealership plans to operate as a: Corporation or LLC: Filing Receipt from the NYS Department of State.
    Partnership or individual using an assumed name: “Business Certificate of Assumed Name” from the county clerk who’s local to your dealership location.
  3. Copies of acceptable government-issued identification for all business owners, officers, and members.
  4. Certificate of Authority from the New York State Department of Taxation and Finance or a valid NYS tax identification number.
  5. Federal employer identification number (FEIN) 
  6. Proof of acceptable workers’ compensation insurance coverage
  7. Business property ownership information as required including copy of the deed, mortgage, or receipted tax bill, rent or lease agreement, copy of the deed, mortgage, or paid tax bill from the property owner
  8. Receipts showing purchased dealer starter kit and required signs from an approved vendor.
  9. Motor Vehicle Dealer Surety Bond as mandated under New York State Vehicle and Traffic Law Section 415(6-b)(Form VS-3) for the following annual vehicle sale amounts; Up to 50 motor vehicles (that are not new vehicles) as retail or wholesale: $20,000. More than 50 motor vehicles (that are not new vehicles) as retail or wholesale: $100,000. New (franchised) motor vehicles including passenger cars, light trucks, and SUVs: $50,000.
  10. The franchise agreement or letter of intent from the manufacturer for those selling new vehicles.
  11. Pay dealer license fees, application and business fees as required by state law.

Other Helpful Information and Links

Dealers should have their facility number ready when requesting a New York auto dealer surety bond.

New York State Department of Motor Vehicles Dealer Bond Form

New York State Department of Motor Vehicles Original Facility Application

Information for Automobile Broker Businesses

The New York State Division of Licensing Services defines “Automobile broker businesses” as those who, for a fee, commission or other valuable consideration offers to provide, or represents that he will provide to a consumer a service of purchasing, arranging, assisting or effecting the purchase of an automobile as agent, broker, or intermediary for a consumer. “Automobile broker business” does not include an individual registered as a dealer pursuant to article sixteen of the New York vehicle and traffic law, or any person who sells, offers for sale or acts as agent, broker or intermediary in effecting the purchase of three or fewer automobiles in any calendar year.

New York automobile broker businesses must furnish and maintain in effect a surety bond in an amount of $100,000 executed by a properly authorized surety company. The surety bonds is conditioned upon the automobile broker business' proper payment of all valid bank drafts, including checks, drawn for the purchase of motor vehicles and safekeeping of all customer deposits related to the sale of motor vehicles between the time of receipt of such customer deposit and the transfer of good and valid title to the vehicle to the customer.