Motor Vehicle Dealer Bonds

What is a motor vehicle dealer surety bond?

A motor vehicle dealer surety bond, or auto dealer bond, is a binding contract among three parties:

  • The principal (the auto dealer who pays for the bond).
  • The obligee (the state DMV, which requires the bond).
  • The surety (the company providing the bond).

Surety bonds are meant to protect customers by encouraging compliance with auto industry regulations and ethical business practices. Should your dealership violate the terms of your business license and damages are awarded, your surety will distribute funds to the affected party in the event you don’t pay the damages. You will then be required to pay back that amount to the surety company.

Auto dealer bonds play a valuable role in regulating the industry, protecting consumers, banks, and the state from losses caused by fraudulent, unethical, or other wrongful actions by the dealership and its employees.

Why do I need a surety bond to sell vehicles?

Auto dealers in most states are required to post a motor vehicle dealer bond with the state’s department of motor vehicles (DMV) as part of the business licensing process.

Anyone who is engaged in the business of selling, buying, or trading vehicles for sale or resale, including vehicles on consignment, is considered a dealer and must be licensed and have the appropriate surety bond.

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How much does an auto dealer surety bond cost?

Market rate for the bond premium is usually 1% of the bond amount required in your state. For example, a $15,000 motor vehicle dealer bond in Maryland carries an annual premium of $150.

You are likely to be offered market rate if you have a good personal credit score and do well on other measures, such as personal and business financial statements.

Here is a list of states in which NNA Surety Bonds provides DMV surety bonds for motor vehicle dealers:

Cost of Auto Dealer Surety Bonds
State Bond Amount Cost
(Annual Premium)
Alaska $25,000/$50,000 $438/$875 (two years)
Alabama $25,000 $250
California $50,000 $400–$2,500*
Colorado $5,000/$50,000 $100/$450
Connecticut $50,000 $500*
Delaware $25,000 $250
Idaho $10,000/$20,000/$40,000 $100/$200/$400*
Illinois $50,000 $410-$500*
Iowa $75,000 $375
Kansas $30,000 $300*
Maine $25,000 $250
Maryland $15,000–$300,000 $150–$2,250*
Minnesota $5,000/$50,000 $100/$300
Mississippi $25,000 $115*
Missouri $50,000/$100,000 $300/$600
Montana $5,000/$15,000/$50,000 $100/$120/$400
Nebraska $50,000 $250
New Hampshire $25,000 $187
New Jersey $10,000 $100
New Mexico $12,500/$50,000 $125/$500*
Nevada Varies Varies*
New York $20,000/$50,000/$100,000 $180-$900
North Carolina $25,000/$50,000 $125-$250*
North Dakota $25,000 $250*
Oklahoma $25,000 $306* (two years)
Oregon $50,000 $400-$500*
Pennsylvania $20,000 $120
Rhode Island $50,000 $500
Tennessee $50,000 $875 (two years)
Utah $10,000/$20,000/$75,000 $120/$240/$900
Vermont Varies Varies*
Virginia $50,000 $750
Washington D.C. $25,000 $250
West Virginia $25,000 $250*
Wyoming $25,000 $250

* Cost can vary depending on the bond amount required and your credit rating

How to get a motor vehicle bond

It’s easy to apply for your motor vehicle dealer surety bond. Simply use our short online form to request a free bond quote or call NNA Surety Bonds at 855-215-2160.

What are some motor vehicle dealer license requirements?

Car dealer licensing requirements vary by state, but typically include:

  • License application.
  • Sales tax certificate.
  • Zoning approval.
  • Proof of insurance.
  • Background check.
  • Auto dealer surety bond.

To get started, check with your state’s DMV about motor vehicle dealer licensing requirements.

What happens if I don’t get an auto dealer bond or I let it expire?

Not having the proper surety bond for your dealership can lead to fines and revocation of your license to sell cars.

Questions? Call NNA Surety Bonds at 855-215-2160
Monday to Friday, 6 a.m. to 5 p.m. (PT)

Providing Bonds and Insurance Since 1957