An Auto Dealer Bond is a type of surety bond that auto dealers need before they can get licensed.
The important thing to remember about these bonds is that they are not a protection for you (the dealer), but for your customers.
How to get an Auto Dealer Bond (Car Dealer Bond)
Step #1: Find Your Bond Amount
Though most states require an Auto Dealer Bond, not all states do.
Use this interactive tool to determine if your state requires a bond.
If they do, the interactive tool will tell you how much your bond amount will need to be. Be sure to apply for the correct bond amount in Step #2.
Step #2: Apply for Bond
Once you know what Auto Dealer Bond amount you need, the next step is to apply for for bond.
You can apply for an Auto Dealer Bond through an insurance company or you can apply for one through a surety bond company who specializes in issuing surety bonds.
Step #3: Sign Indemnity Agreement and Pay
After applying for your bond, the surety bond company will evaluate your information and determine how much you’ll need to pay for your bond.
Unlike insurance policies where you have to pay every month, you only have to pay one time for your surety bond.
You will not have to pay the full bond amount to get bonded!
A $25,000 Auto Dealer Bond will not cost you $25,000.
You will only need to pay 1-15% of the total bond amount, depending on your personal credit score.
The price you pay will be a one-time payment, not a monthly payment.
Before paying for your bond, you will need to sign an Indemnity Agreement.
Can’t pay for your bond up front? Don’t worry. Many surety bond companies have financing options for individuals who need to get bonded. This splits your total payment into smaller portions that you pay over a period of time.
You can learn more about financing.
Step #4: Submit Bond to DMV
Once you have your Auto Dealer Bond, all that’s left to do is send it to the state along with your license application.
The state should contact you once they receive your bond.
Upon approval of your paperwork, they will mail you your Auto Dealer License.
Make sure you understand how bond claims work. Anyone can make a claim on your Auto Dealer Bond.