Motor Vehicle Dealer Bonds
Motor Vehicle Dealer Bond Information
A Motor Vehicle Dealer Bond (sometimes called an auto dealer bond, DMV Bond, MVD bond, or car dealer bond), is a type of surety bond that guarantees that the new or used auto dealer complies with all applicable federal, state, and local laws, tax, licensing guidelines and other conditions pertaining to managing a motor vehicle dealership.
Getting a motor vehicle dealer surety bond is a required part of the dealer licensing application process in many states. In some states, different types of dealerships, such as retail dealers, used vehicle dealers, or ATV and motorcycle dealerships, may need different types of bonds.
The surety bond protects consumers in the event the dealership (surety bond customer, or principal) engages in fraudulent practices, misrepresentation or other wrongful acts. In most states, a dealership must submit their auto dealer surety bond to the state Department of Motor Vehicles in order to obtain an auto dealer license in that state.
Some examples of a dealer's actions that may result in third party damages and a surety bond claim include:
- Delivering an invalid or fraudulent certificate of title
- Neglecting to pay motor vehicle fees
- Misrepresentation or other unethical business practices
- Failure to make sales tax payments to the state government
Motor Vehicle Dealer Bonds by State
What is the Surety Bond Cost for an Auto Dealer Bond?
The easiest way to find out your auto dealer bond cost is to get a free bond quote today from Surety Bonds Direct. Most free quotes take only a few minutes, and the application process is quick and simple.
The following factors determine the cost of a car dealer bond:
- Credit Score: A principal with a good credit score will usually have a lower premium for their auto dealer bond.
- Bond Amount: A surety bond premium is a percentage of the bond amount required by the DMV, which means that principals who need a higher bond amount will pay a higher premium.
- Bond Type: Some states subject certain types of dealerships to different bond amounts and requirements. For example, in the state of California, used car dealers, wholesale-only dealers, and motorcycle dealers are all subject to different California auto dealer bond amount requirements.
- Personal and Financial History: A principal with a criminal record or a history of surety bond claims and/or lawsuits will typically pay a higher bond premium.
Having bad credit doesn’t mean it’s impossible to get an auto dealer bond, however. Through our extensive network of surety companies, we can help your car dealership get a surety bond with bad credit, and our surety bond premium financing options help make your auto dealer bond premium affordable regardless of personal credit.
You may also want to see our article on How to Get a Motor Vehicle Dealer's License and How to Get a Car Dealer's License Without a Lot.