In most states, motor vehicle dealers are required to post a motor vehicle dealer bond as part of the auto dealer licensing requirements. A motor vehicle dealer bond is often referred to by different titles such as a used car dealer bond, vehicle vessel bond, auto dealer bond, used car dealer bond, or DMV bond.
The amount of the motor vehicle dealer bond will depend on which types of vehicles are to be sold, in which state you wish to operate the business, and the amount of vehicles you plan to sell to the public.
A motor vehicle dealer is generally someone who:
Each state requires a vehicle dealer to be bonded so the public is protected from a dealer’s misconduct. A bond is a legal contract that holds dealers to the requirements stated in the bond.
Each bond states specific legal guidelines, however the main goal of a vehicle dealer bond is to protect the public from any financial or legal loss caused by the vehicle dealer.
If the vehicle dealer violates the terms of the bond, a claim can be filed against the bond, which the surety would pay out. The dealer would then be legally responsible for paying back the surety company for the paid claim. States take this bond so seriously that a business license will not be granted without a surety bond.
The State of Alabama (Alabama Department of Revenue’s Motor Vehicle Division) requires used car dealers to file a $10,000 surety bond and new car dealers to file a $25,000 surety bond.
The State of Alaska (Alaska Commissioner of Administration) requires dealers that only sell motorcycles to file a $25,000 surety bond, while all other vehicle dealers must file a $50,000 surety bond.
The State of Arizona (Arizona Department of Transportation) requires a minimum bond amount of $100,000 for all motor vehicle dealers.
The State of Arkansas (Arkansas Department of State Police) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of California (California Department of Motor Vehicles) requires motorcycle dealers, motorcycle lessor-retailers, ATV dealers, and wholesale-only dealers that sell less than 25 vehicles per year to file a $10,000 surety. All other commercial vehicle dealers must file a $50,000 bond.
The State of Colorado (Colorado Motor Vehicle Dealer Board) requires a minimum bond amount of $50,000 for all motor vehicle dealers.
The State of Connecticut (Connecticut Department of Motor Vehicles) requires motor vehicle repairers to file a $5,000 bond, motor vehicle leasing/renting companies to file a $10,000 bond, and auto dealers to file a $50,000 bond.
The State of Delaware (Delaware Division of Revenue) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Florida (Florida Department of Highway Safety and Motor Vehicles) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Georgia (State Board of Registration-Used Motor Vehicle Dealers Division) requires a minimum bond amount of $35,000 for all motor vehicle dealers.
The State of Hawaii (Motor Vehicle Industry Board Department of Commerce & Consumer Affairs PVL Licensing Branch) requires motorcycle/scooter dealers to file a bond amount of $10,000, new motor vehicle dealers to file a bond amount of $50,000-$200,000, and used motor vehicle dealers to file a bond amount of $25,000-$100,000.
The State of Idaho (Idaho Transportation Department) requires dealers that sell motorcycles, ATVs, or snowmobiles to file a $10,000 bond, while wholesale dealers must post a $40,000 bond. Sellers of all other types of vehicles require a $20,000 bond.
The State of Illinois (Illinois Secretary of State) requires a dealer that sells more than five vehicles during one calendar year to file a bond with a minimum amount of $20,000.
The State of Indiana (Indiana Secretary of State) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Iowa requires (Iowa Department of Transportation) requires a minimum bond amount of $75,000 for all motor vehicle dealers.
The State of Kansas (Kansas Department of Revenue) requires a minimum bond amount of $30,000 for all motor vehicle dealers.
The State of Kentucky (Kentucky Motor Vehicle Commission) requires a minimum bond amount of $15,000 for all motor vehicle dealers.
The State of Louisiana (Louisiana Motor Vehicle Commission) requires a minimum bond amount of $15,000 for all motor vehicle dealers.
The State of Maine (Maine Department of Secretary of State, Bureau of Motor Vehicles) requires a bond amount of $5,000-$25,000, depending on the number of vehicles sold annually.
The State of Maryland (Maryland Motor Vehicle Administration) requires a bond amount of $15,000-$300,000, depending on the number of vehicles sold annually and whether the cars are new or used.
The State of Massachusetts (Massachusetts Registry of Motor Vehicles) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Michigan (Michigan Secretary of State) requires a minimum bond amount of $10,000 for all motor vehicle dealers.
The State of Minnesota (Minnesota Department of Public Safety) requires dealers of boats, small horse trailers, mopeds, snow-mobile dealers, or any trailer carrying less than 15,000 pounds to file a $5,000 bond. All other vehicle dealers must file a $50,000 bond.
The State of Mississippi (State of Mississippi Motor Vehicle Commission) requires wholesale and used motor vehicle dealers to file a $25,000 bond. If the dealer conducts business at more than one location throughout Mississippi, a ‘blanket’ bond of $100,000 must be filed. The blanket bond covers multiple business locations instead of having to bond each location individually.
The State of Missouri (Missouri Department of Revenue) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Montana (Montana Attorney General) requires dealers of boats, snowmobiles, non-street legal motorcycles or quadricycles to file a $5,000 bond. Dealers of street-legal motorcycles or quadricycles must file a $15,000 bond. All other new or used dealers must file a $50,000 bond.
The State of Nebraska (Nebraska Motor Vehicle Industry Licensing Board) requires a minimum bond amount of $50,000 for all motor vehicle dealers.
The State of Nevada (Nevada Department of Motor Vehicles) requires dealers of utility trailers or boat trailers weighing 3,500 pounds or less to file a $10,000 bond. Dealers of motorcycles, horse trailers, or utility trailers weighing 3,501 pounds or more must file a bond of $50,000. All other new and used car dealers must file a $50,000 bond.
The State of New Hampshire (New Hampshire Department of Safety Director of the Division of Motor Vehicles) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of New Jersey (New Jersey Motor Vehicle Commission) requires a minimum bond amount of $10,000 for all motor vehicle dealers.
The State of New Mexico (New Mexico Vehicle Division) requires motorcycle dealers to file a $12,500 bond, and new and used car dealers to file a $50,000 bond.
The State of New York (New York Commissioner of Motor Vehicles) requires new car dealers to file a $50,000 bond. Used car dealers that sell fewer than 200 vehicles annually must file a $10,000 bond, and used car dealers who sell 200 or more vehicles annually must file a $25,000 bond.
The State of North Carolina (North Carolina Division of Motor Vehicles) requires a minimum bond amount of $50,000 for all motor vehicle dealers.
The State of North Dakota (North Dakota Department of Transportation) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Ohio (Ohio Bureau of Motor Vehicles) requires a minimum bond amount of $20,000 for all motor vehicle dealers.
The State of Oklahoma (Oklahoma Used Motor Vehicle and Parts Commission for Used Cars or Oklahoma Motor Vehicle Commission for New Cars) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Oregon (Oregon Department of Transportation) requires a minimum bond amount of $2,000 for motorcycle, moped, and all-terrain vehicle dealers, and a bond amount of $40,000 for all other motor and recreational vehicle dealers.
The State of Pennsylvania (Pennsylvania Department of Transportation) requires a minimum bond amount of $20,000 for all motor vehicle dealers.
The State of Rhode Island (Rhode Island Division of Motor Vehicles-Dealers’ License and Regulations Office) requires a minimum bond amount of $50,000 for all motor vehicle dealers.
The State of South Carolina (South Carolina Department of Motor Vehicles) requires all new or used dealers to file a $30,000 bond and wholesale auctioneers, travel trailers and motorcycle dealers to file a $15,000 bond.
The State of South Dakota (South Dakota Department of Revenue and Regulation’s Division of Motor Vehicles) requires motorcycle and snowmobile dealers to file a $5,000 bond, trailer and emergency vehicle (over 3,001 lbs) dealers to file a $10,000 bond, boat dealers to file a $20,000 bond, new and used vehicle dealers to file a $25,000 bond, and car action agencies to file a $50,000 bond.
The State of Tennessee (Tennessee Motor Vehicle Commission) requires a minimum bond amount of $20,000 for all motor vehicle dealers.
The State of Texas (Texas Department of Motor Vehicles) requires a minimum bond amount of $20,000 for all motor vehicle dealers.
The State of Utah (Utah Motor Vehicle Enforcement Division) requires small trailer dealers and new or used car dealers to file a $75,000 bond, and motorcycle and small trailer dealers to post a $10,000 surety bond.
The State of Vermont (Vermont Commissioner of Motor Vehicles) requires a minimum bond amount of $20,000 and a maximum amount of $35,000, depending on how many vehicles are sold annually.
The State of Virginia (Virginia Department of Motor Vehicles) requires a minimum bond amount of $50,000 for all motor vehicle dealers.
The State of Washington (Washington State Department of Licensing) requires vehicle wreckers to file a $1,000 bond, dealers who sell 15 vessels per year valued greater than $2,000 to file a $5,000 bond, tow truck operator dealers to file a $5,000 bond, dealers of manufactured travel trailers to file a $20,000 bond, and dealers of manufactured mobile homes to file a $40,000 bond.
The State of West Virginia (West Virginia Department of Motor Vehicles) requires a minimum bond amount of $25,000 for all motor vehicle dealers.
The State of Wisconsin (Wisconsin Department of Transportation) requires motor vehicle dealers to file a surety bond. The minimum bond amount varies.
The State of Wyoming (Motor Vehicle Services Division of the Wyoming Department of Transportation) requires motor vehicle dealers to file a $25,000 bond.
The bond amount is the amount of money that will be paid out if a claim is filed against the bond. For example, if a vehicle dealer mindfully sells a faulty used car to a consumer, the consumer can make a claim against the bond to have their money repaid to them (up to the full bond amount) that they paid for the car. The surety company does not set the bond amount; each state does. Every state has its own set bond amount.
Many people assume that the price they pay for the bond is the bond amount, which would be a very high cost. However, the actual bond cost (also referred to as the bond premium) is only a small percentage of the bond amount. At Surety1, we work to get our customers the lowest possible price for a bond.
Every state sets its own length of bond validity. The state may choose to have the bond be valid for one year, two years, or more. For example, the state of Colorado sets its auto dealer bond to be valid for one year. The renewal date is one year from the effective date of the bond.
Before a bond expires, it must be renewed. Renewals are less expensive than the original cost of buying a bond since a renewal is just extending the bond’s validity. At Surety1, we remind our clients about their upcoming renewal dates with a friendly message. If the bond is not renewed before the renewal date, then the bond is invalid and no longer legal to use.
Read our Car Dealer License Guide to learn how to get your dealership licensed and bonded. It includes information on how to get your business licensed, the specific surety bond that you need, and all state requirements for the bond.