An auto dealer bond, also called a motor vehicle dealer bond, is a bond you need before your state will give you a dealer license. It protects your buyers and the state.
- Who needs it
- Licensed motor vehicle dealers
- Typical bond amount
- $10,000 to $75,000, set by your state
- What you pay
- A small percent of the bond amount, based on credit
- Term
- One year, renewed with your dealer license
- A claim protects
- Car buyers and the state
What is an Auto Dealer Bond?
An auto dealer bond is a promise that you will run an honest dealership. You will follow the law, pay the right title fees and taxes, and not cheat buyers. If you do something wrong, the harmed person can file a claim.
The bond is for the public, not for you. The state asks for it so that car buyers have a safety net.
Who needs an Auto Dealer Bond?
Anyone who wants to sell a certain number of cars per year needs a dealer license, and the license needs this bond. This covers used car lots, new car dealers, wholesalers, and many online sellers.
Each state sets its own rule. Some states also ask for the bond before you can renew your license each year.
How does an Auto Dealer Bond work?
Here is the simple path:
- Your state sets the bond amount. It is often $10,000 to $75,000.
- You buy the bond from Junno Surety. You pay a small percent of the bond amount, not the full amount.
- You file the bond with your dealer license application.
- The state issues your dealer license.
- If you cheat a buyer or skip title work, they can file a claim against the bond.
If a claim is paid, you repay the bond company. Honest paperwork keeps you claim free.
How much does an Auto Dealer Bond cost?
Your price is a small percent of the bond amount, and it depends on your credit. Junno Surety prices these at the industry rate minus 5%.
Many dealers with good credit pay only a few hundred dollars a year for a large bond. We will give you a fast, free quote.
What happens if someone files a claim?
A claim can come from a buyer who was lied to, or from the state if you did not pay title fees or sales tax. The bond company checks the claim. If it is valid, they pay it, and then you pay them back.
How to get your Auto Dealer Bond from Junno Surety
Junno Surety knows dealer bonds. Send us your state and the bond amount from your license form. We can often get your bond issued the same day so you can open or renew on time.
We are a licensed surety bond agency and can often issue your auto dealer bond the same day. Start your free quote → or call (762) 499-0237.
Things to know about an Auto Dealer Bond
Most dealer bond claims come from two places. The first is a buyer who feels they were cheated, like a rolled-back odometer or a hidden problem. The second is the state, when title fees or sales tax are not paid. Both are easy to avoid. Be honest in every sale and write down what you tell buyers. File titles on time and pay what you owe to the state. Keep copies of every deal. If you do these things, your bond stays claim free, your renewals are smooth, and your reputation grows. A clean record also helps you get a better rate next year.
Frequently asked questions
How much does the bond cost?
You pay a small percent of the bond amount, based on your credit. Many dealers pay a few hundred dollars a year. Ask us for a free quote.
Is this the same as dealer insurance?
No. The bond protects buyers and the state. You would still want garage liability insurance to protect your business.
Do I need a new bond every year?
Most states want the bond kept active and renewed with your license. We will remind you before it expires.
Does the bond cover my inventory or shop?
No. The dealer bond protects buyers and the state. To protect your cars and building, you need garage and property insurance.
Can I get bonded as a brand new dealer?
Yes. New dealers get bonded every day. Your rate is based on your credit, and we work with many markets to find a fair price.