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What is an Auto Dealer Bond?

An auto dealer bond protects the customers of dealerships from financial harm caused by breaking the rules which regulate the industry.  Failure to transfer title, taking payment for a vehicle and selling it to another person, and other fraudulent activity are classic examples of breaking the rules.  Most states require auto dealer bonds before a company can get their state license to sell cars.

How much is an Auto Dealer Bond?

The auto dealer bond cost mostly depends on the personal credit score of the owners and bond amount.  A car dealership owned by someone with good credit can cost anywhere from $200-500.  However, a car dealership owned by someone with less than stellar credit can cost up to 10% of the bond amount.  For example: A $10,000 bond could cost someone with good credit $100 annually and someone with bad credit up to $1,000 annually.  The best way to determine your dealer bond cost is to apply for a dealer bond online.

Which states require an Auto Dealer Bond?

Almost every state requires an auto dealer bond.  Please select a state from the drop down menu below to learn your dealer bond cost and other state-specific surety bond information.

Who needs an Auto Dealer Bond?

Most individuals and businesses who sell cars will find themselves in need of an auto dealer bond.  States often prequalify and vet dealerships by verifying a surety bond is place prior to issuing a license.  The bonds must be in place during the entire duration of the license and renewed each year or every two years in some cases.  A dealers license will most likely be suspended if your surety bond expires or is non-renewed.  Listed below are the states which require auto dealer bonds:

Why do I need an Auto Dealer Bond?

We mentioned earlier that these bonds protect consumers from financial harm.  Auto dealer bonds and most other license bonds offer money to reimburse a customer if the dealer defrauds them or violates the industry rules.  In other words, it can reimburse the car buyer if they get ripped off and, unfortunately, it happens more often than you think.  Typically, an unhappy customer first files a complaint with the state.  The state then tries to mediate the complaint and, if unsuccessful, can place a claim on the surety bond if you’re business is at fault.

How do I apply for an Auto Dealer Bond?

  1. Complete our online Auto Dealer Bond application, or
  2. Download and complete our printable Auto Dealer Bond application, and
  3. Receive your surety bond quote in minutes!

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How can I avoid a surety bond claim?

Avoiding an auto dealer claim is simple.  You need only follow the rules, statutes, etc. which apply to the car sales profession in your state.  In many cases, these rules have a lot to do with common sense and best business practices.  It’s also important to remember the difference between insurance and surety bonds.  Primarily, you are responsible for paying back any money the surety company pays on your behalf.

Many states like Florida, Alabama, and California require auto dealer bonds to protect consumers.