Colorado Motor Vehicle Salesperson Surety Bond
What is a motor vehicle salesperson bond?
Most states require vehicle dealerships and salespersons to obtain a state license to legally operate. In most of these cases, only the dealership must have a surety bond; however, the state of Colorado is an exception.
In Colorado, both vehicle dealers and salespersons are required to obtain and show proof of a surety bond in order to be legally licensed.
A vehicle salesperson bond is a contract between three primary parties:
- The principal, in this case the salesperson.
- The obligee, in this case the state of Colorado.
- The surety, the company that issues the bond to the salesperson.
In the event that you, the policyholder, violate a law or act in an unethical manner toward a consumer, the affected individual can make a claim against your bond. In this situation, the surety company would pay the claimant for their losses, and you would then be responsible for repaying the surety.
How much does a vehicle salesperson bond cost?
Colorado requires all vehicle salespersons to be bonded in the amount of $15,000. This is the bond's coverage amount—also referred to as the penal sum. In order to obtain your bond policy, you will need to pay an annual premium that costs only a small percentage of the full bond amount.
NNA Surety Bonds offers CO vehicle salesperson bonds for a premium rate as low as $90 based on an individual's credit.
Why do I need a bond to sell motor vehicles in Colorado?
Simply put, all vehicle salespersons in Colorado must be bonded because it's the law.
Colorado has deemed it part of the state’s requirements for obtaining proper business licensure. Beyond this, a surety bond helps promote best practices within auto sales, including:
- Following all of Colorado’s legal and regulatory requirements.
- Acting ethically with customers and their financial information.
- Providing compensation to a customer for their loss in the event a law is violated.
Ultimately, surety bonds are required because they help financially protect consumers.
How do I become a licensed motor vehicle salesperson in Colorado?
In order to get a license to sell vehicles in Colorado, you must first find a dealer who wishes to hire you. Next, you will need to submit an application to Colorado's Department of Revenue.
As part of the application process, you will need to complete or provide the following documents:
- Application (DR 2115)
- Mastery Examination Affidavit (DR 2097)
- Surety Bond in the amount of $15,000 (a photocopy may be submitted)
- Secure Verifiable Identification
- Verification of Fingerprints Form (DR 2197)
- Affidavit – Restriction on Public Benefits (DR 4679)
- Certified Court Documents (if applicable)
- Salesperson Application Information (DR 2234)
You can learn more about Colorado's licensing process by visiting the Colorado Department of Revenue site.
Need to bond your auto dealership? Get a Colorado motor vehicle dealer bond here.