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Tennessee Motor Vehicle Dealer Bonds

What is a Tennessee Motor Vehicle Dealer Bond?

Motor vehicle dealers in the state of Tennessee must post a $50,000 surety bond for the benefit of the Tennessee Motor Vehicle Commission. Pursuant to Tennessee Code Annotated 55-17-111, the bond is required of any business engaged in the activities of buying, selling, dealing, or offering or displaying motor vehicles for sale.

The surety bond ensures that the principal faithfully performs duties in accordance with the provisions of Chapter 321 Public Acts of 1993, State of Tennessee.

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Motor Vehicle Dealer Bond - Used Vehicles

$50,000 Bond

2-Year Bond

Motor Vehicle Auction Bond

$50,000 Bond

Motor Vehicle Dealer Bond - New Vehicles

$50,000 Bond

2-Year Bond

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Why is a Tennessee Motor Vehicle Dealer Bond Required?

The purpose of the surety bond is to protect any person who is damaged due to the following violations by the motor vehicle dealer:

  • Nonpayment of registration, taxes, related fees or monies related to a retail customer's prepaid title
  • Failure to deliver valid vehicle title, free and clear of any interests or liens except those expressly assumed in writing by the buyer

The bond is cancelable by the surety company by providing 60 days advance written notice to the Tennessee Motor Vehicle Commission.

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

The following is an overview of key auto dealer licensing requirements in Tennessee.

  • Permanent facility requirements as specifically outlined by the Commission
  • Sign Requirements
  • Surety Bond
  • Liability Insurance
  • Business Tax License
  • Financial Statement
  • Corporate Documentation
  • Sales Tax Documents
  • Financial Background Disclosure
  • Dealer License Fees as required
  • Additional items may be needed and exact requirements may vary based on applicant, license type or obligee discretion. Please see obligee and state links in the Other Helpful Information and Links section below or contact the obligee directly for more information.

Additional Tennessee Motor Vehicle Dealer Bond Resources & Links

The following are specific requirements as outlined by the State of Tennessee Motor Vehicle Commission:

"The duration of the bond is two (2) years beginning in the month of the expected license issuance and expiring on the last day of the same month two (2) years later. Only the original surety bond is acceptable and is to be signed by the principal owner of the dealership or if a partnership any partner must sign and must be submitted to the Commission with the license application. If a partnership, all partner’s names must be listed. If a dba name is being used the bond has to reflect this. The name on the bond MUST be the same as the entity to be licensed and the dealer address MUST be the physical address of the dealership."

As a result of the 2-year term required for this bond, it is important to note that your premium will reflect the cost of the bond for the extended term. The bond also must become effective on the first day of the month and expire on the expiration date of your business license.

Tennessee State Government