Texas Motor Vehicle Dealer Bonds
Texas Motor Vehicle Dealer Bond Information
The Texas Department of Motor Vehicles requires that all Texas auto dealers secure a surety bond in the amount of $25,000. This is as a licensing requirement in order to engage in vehicle sales in the state of Texas (see more information on Texas license requirements). A surety bond is required for all GDN categories of motor vehicle, motorcycle, wholesale only, wholesale motor vehicle auction and independent mobility motor vehicle, but a surety bond is not required of franchised dealers, travel trailer dealers, or trailer/semitrailer dealers.
As required by the state of Texas, these surety bonds are issued for a two-year term, expire on the last day of the month, and are not permitted to expire during the licensing period. Surety Bonds Direct is a licensed bonding company in Texas and offers exceptional rates for Texas Motor Vehicle Dealer Bonds.
What Does a Motor Vehicle Dealer Bond Protect Against?
The Texas Motor Vehicle Dealer Bond protects consumers from fraud or misrepresentation by the car dealer. The bond obligates the bonded principal to transfer good title to each motor vehicle sold and pay all valid bank drafts, including checks drawn for the purchase of motor vehicles. In the event of a violation and associated damages, this obligation extends to the surety company.
Getting Your Texas Business License or Registration
The following information will be needed to complete the Texas Department of Motor Vehicles eLICENSING process:
- Surety Bond in the coverage amount of $25,000
- Business Details including physical address (“The Licensed Location”) DBAs, mailing address, additional/supplemental locations, and Dealer Plates
- Ownership Information including Criminal History, and Military Service
- Place of Business Structure including Proposed Location, Signage, Posted Business Hours, Lease/Ownership of Dealership Property, and Display Area
- Previously Held Texas Licenses
- Property Compliance including Proof of Occupancy and Place of Business Location
- Previous Texas Occupations Code Violations
- Assumed Name Certificate
- Proof of Owner Identity
- Certificate of Incorporation
- Criminal Court Papers
Application tips from the Texas Department of Motor Vehicles;
- Provide a reliable contact phone number on new applications, amendments, and renewals.
- Review your documents before sending them to save time.
- If you are uncertain about the completeness of your application for any reason, call and speak to a Licensing Specialist before submission.
- Check to ensure that bond dates, names, and address are entered correctly, bond is signed, bond is included on renewals, POA accompanies all bonds or bond riders.
- Personal information and Photo ID are included.
- You have obtained your DBA certificate from the correct office.
Other Helpful Information and Links
The bond is required for all GDN categories of motor vehicle, motorcycle, wholesale only, wholesale motor vehicle auction and independent mobility motor vehicle (INMV). The bond is not required of franchised dealers, travel trailer dealers, or trailer/semitrailer dealers. The bond must always equal $25,000 and a separate bond is required for each GDN category. In the event an action is made and the bond is reduced, the dealer must immediately bring the bond amount back to $25,000. For a new license, the license cannot be approved unless the bond is in effect on the date the application is approved. The license expiration date and the bond expiration date should be the same.
An Independent (GDN) License is the basic Texas motor vehicle dealer license that permits a person to buy, sell or exchange the type of used vehicle for which the GDN license is issued. GDN licenses are divided into categories. When applying for license, you must select one of the independent license types on the application. You must submit a separate application for each license type if you need more than one license type. The following GDN license types require a surety bond.
Independent Motor Vehicle License - Buy, sell, or exchange any type of used cars, trucks, motor homes, and neighborhood vehicles. using dealer's temporary tags, buyer's temporary tags, and metal dealer license plates on motor vehicles only. Must provide a surety bond.
Independent Motorcycle License - Buy, sell, or exchange any type of used motorcycles, motor scooters or ATVs using dealer's temporary tags, buyer's temporary tags, and metal dealer license plates on motorcycles, motor scooters or ATVs only. Must provide a surety bond.
Wholesale Dealer License - Sell or exchange vehicles only with other licensed dealers and are not required to have a five-vehicle display area. May not sell vehicles to retail purchasers. Wholesale vehicle dealers may buy, sell, or exchange used vehicles, including motor vehicles, motorcycles, and travel trailers. May buy, sell, or exchange new or used trailers and/or semitrailers. May use temporary tags and metal dealer license plates. Must provide a surety bond.
Wholesale Motor Vehicle Auction License - Offer vehicles for sale by bid only to licensed dealers at an auction at a permanent location. May not make facilities or GDN available to any other person for the purpose of the sale or auction of vehicles. May be issued only one wholesale motor vehicle auction GDN for a particular location. May be issued a regular motor vehicle GDN for a location that has been issued a wholesale motor vehicle auction GDN. Must provide a surety bond.
Independent Mobility Motor Vehicle Dealer License - allows a dealer to offer to sell new mobility motor vehicles. A "mobility motor vehicle" is a motor vehicle designed and equipped to transport a person with a disability. Must provide a surety bond.
Once you receive the original signed bond form from Surety Bonds Direct, submit it to the Texas Department of Motor Vehicles at the following address:Texas Department of Motor Vehicles
Motor Vehicle Division
P. O. Box 2293
Austin, TX 78768-2293Telephone 1-888-368-4689