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Guides > Car Dealer License Guide

Starting up a vehicle dealer business can become tricky and expensive, so it is crucial to find the correct information and to locate a surety company that will deliver excellent service.

There are different terms the surety bond can fall under, such as Motor Vehicle Dealer License, Car Dealer License, Auto Dealer License, or Dealership License. The state in which the dealership will conduct business determines the exact name of the surety bond.

There are many questions one may have before starting a business to sell vehicles such as:

  1. How do I become a licensed business?
  2. What type of surety bond do I need in order to legally sell vehicles?
  3. Why does my business need a surety bond to sell vehicles?

For many applicants, the process to apply for a bond can get confusing, so by the end of this guide, auto dealers will have a clear understanding of the licensing and bonding process. However, before a business can become licensed, a surety bond may need to be filed to ensure the business will comply with state and/or federal requirements.

Click Here to Apply for a Motor Vehicle Dealer Bond – Free no obligation quote, easy online application. All States 

A Source to Find Business Licensing Information

Before starting up any kind of business, certain legal obligations are enforced. For each state as well as the city of operation, the obligations alter. To find out information on business license types, visit the U.S. Small Business Administration’s website. The state business license offices are categorized by state. Choose the state the business will be operating in. The next page will provide important information such as the location to get the business license and the types of state licenses required.

For example in Arizona, not all businesses must be licensed. A guide to basic state taxes and licensing requirements can be found on the SBA’s website. Also, the basic business types of licensing are provided such as state transaction privilege tax and regulatory licensing/permits.

Fortunately, there is much more information provided on the SBA website, such as help to write a business plan or to choose a business structure and location, as well as links to guide starting a new business.

 

Car Dealer License Guide - Getting Licensed

 

How to become a licensed Car Dealer

1. Access local requirements.

A business license needs to be obtained for the state as well as the city the business will operate in. Each city has a list of addresses that fall into a municipality.

To figure out a particular city’s business licensing requirements, search the web with the your city’s name followed by business license. For example, if your business were located in the city of Roseville, search “Roseville business license.” You should be able to easily find the city of Roseville’s official requirements for a business license.

2. Find the business code.

The correct business code will be different for each type of business. Different codes call for a different application process. Also, every city has its own set of requirements. Your city’s business license web page will provide the particular business code needed.

3. Seek the forms that need to be filled out.

Particular forms that need to be filled out can also be found on the city’s business license webpage.

4. Complete the necessary forms.

Filling out the forms can either be done online or by hand and submitted to the city. Information required may be the type of business, business address, name of business owner, contact information, federal identification number, and the number of employees the business will have.

5. File the forms and pay the filing fee.

Forms can be filed either online or through mail. The particular city’s website will provide the proper contact information for submission. Each city has its own filing fee requirements. The type of business is a factor that contributes to the filing fee.

6. Receive the business license and follow city ordinances.

After the license has been received by the applicant, the business may begin operation. However, the city may enforce certain regulations such as displaying the license in the business location or reporting any major changes to the business application.

 

Car Dealer License Guide - Getting Bonded

 

Motor Vehicle Dealer Surety Bonds

Click Here to Apply for a Motor Vehicle Dealer Bond – Free no obligation quote, easy online application. All States 

In addition to a business license, your state will require you to obtain a surety bond. This section of the guide covers surety bond information and requirements.

Who Requires a Vehicle Dealer Surety Bond?

Each state’s Department of Motor Vehicles (DMV) requires auto dealers to file a surety bond before they can receive their auto dealer license. For example, in California, the California DMV requires a Motor Vehicle Dealer surety bond for businesses that sell cars within California. Before a business can obtain a license, a surety bond must be filed with the California DMV.

What is a Motor Vehicle Dealer Surety Bond?

Similar to many other types of surety bonds, an auto dealer surety bond provides a financial promise which helps regulate the car dealer industry. The bond protects customers, financial enterprises and/or government agencies, as well as the sellers. In the case of the car dealer committing fraud, or conducting business unethically, the bond aids the party at risk recover from any financial loss. A business achieves credibility and reliability with a surety bond.

How to Determine the Surety Bond Type

As stated previously in this guide, the way the vehicle dealer surety bond is referred to can take many different forms. The location and the type of dealership are factors that determine the type of auto dealer surety bond needed. Even though the vehicle dealer bond can have a slightly different title, the bond basically works in the same way. If the bonded motor vehicle dealer breaks the agreement stated in the surety bond, a claim can be made against the bond which the surety company will pay out.

The five common motor vehicle bond types are:

  • DMV
  • RV
  • Motorcycle dealer
  • Used Car Dealer
  • Wholesale Car Dealer

Where to Find Out if a Bond Is Required

To be sure a business is being bonded correctly, a business can contact the local agency to find out if a bond is required or not. Even if a business has not been notified a bond is required, the agency should still be contacted. For example, a new car dealership in California would contact the California DMV.

Click Here to Apply for a Motor Vehicle Dealer Bond – Free no obligation quote, easy online application. All States 

Surety Bond Cost and Validity

There are a range of factors that have a part in the cost for this type of surety bond. The price for the bond referred to as the premium depends on the required bond amount, credit score, and Surety Company that ensures the bond. The best way to find the price for the bond is to apply for it and then speak to an agent. At Surety1, the application is free along with easy and convenient access to licensed agents.

A surety bond is valid for a certain length of time. It needs to be renewed with the surety company before it expires in order to legally stay in business. Fortunately, the cost for renewal is only a small fraction of the bond premium and the process is much simpler.

 

Car Dealer License Guide - State Requirements

 

State Requirements & Costs for Motor Vehicle Dealer Bonds

Alabama Motor Vehicle Dealer 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.

Alaska Motor Vehicle Dealer Buyer’s Agent 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.

Arizona Motor Vehicle Dealer Surety Bond

The State of Arizona (Arizona Department of Transportation) requires a minimum bond amount of $100,000 for all motor vehicle dealers.

Arkansas Motor Vehicle Dealer Bond

The State of Arkansas (Arkansas Department of State Police) requires a minimum bond amount of $25,000 for all motor vehicle dealers.

California Motor Vehicle Dealer Surety Bond

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.

Colorado Motor Vehicle Dealer Bond

The State of Colorado (Colorado Motor Vehicle Dealer Board) requires a minimum bond amount of $50,000 for all motor vehicle dealers.

Connecticut Motor Vehicle Dealer Surety Bond

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.

Delaware Motor Vehicle Dealer Bond

The State of Delaware (Delaware Division of Revenue) requires a minimum bond amount of $25,000 for all motor vehicle dealers.

Florida Motor Vehicle Dealer Surety Bond

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.

Georgia Motor Vehicle Dealer Bond

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.

Hawaii Motor Vehicle Dealer Bond

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.

Idaho Motor Vehicle Dealer Bond

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.

Illinois Motor Vehicle Dealer 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.

Indiana Motor Vehicle Dealer Bond

The State of Indiana (Indiana Secretary of State) requires a minimum bond amount of $25,000 for all motor vehicle dealers.

Iowa Motor Vehicle Dealer Bond

The State of Iowa requires (Iowa Department of Transportation) requires a minimum bond amount of $75,000 for all motor vehicle dealers.

Kansas Motor Vehicle Dealer Bond

The State of Kansas (Kansas Department of Revenue) requires a minimum bond amount of $30,000 for all motor vehicle dealers.

Kentucky Motor Vehicle Dealer Bond

The State of Kentucky (Kentucky Motor Vehicle Commission) requires a minimum bond amount of $15,000 for all motor vehicle dealers.

Louisiana Motor Vehicle Dealer Bond

The State of Louisiana (Louisiana Motor Vehicle Commission) requires a minimum bond amount of $15,000 for all motor vehicle dealers.

Maine Motor Vehicle Dealer Bond

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.

Maryland Motor Vehicle Dealer Bond

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.

Massachusetts Motor Vehicle Dealer Bond

The State of Massachusetts (Massachusetts Registry of Motor Vehicles) requires a minimum bond amount of $25,000 for all motor vehicle dealers.

Michigan Motor Vehicle Dealer Bond

The State of Michigan (Michigan Secretary of State) requires a minimum bond amount of $10,000 for all motor vehicle dealers.

Minnesota Motor Vehicle Dealer Bond

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.

Mississippi Motor Vehicle Dealer 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.

Missouri Motor Vehicle Dealer Bond

The State of Missouri (Missouri Department of Revenue) requires a minimum bond amount of $25,000 for all motor vehicle dealers.

Montana Motor Vehicle Dealer Bond

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.

Nebraska Motor Vehicle Dealer Bond

The State of Nebraska (Nebraska Motor Vehicle Industry Licensing Board) requires a minimum bond amount of $50,000 for all motor vehicle dealers.

Nevada Motor Vehicle Dealer Bond

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.

New Hampshire Motor Vehicle Dealer 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.

New Jersey Motor Vehicle Dealer Bond

The State of New Jersey (New Jersey Motor Vehicle Commission) requires a minimum bond amount of $10,000 for all motor vehicle dealers.

New Mexico Motor Vehicle Dealer Bond

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.

New York Motor Vehicle Dealer 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.

North Carolina Motor Vehicle Dealer 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.

North Dakota Motor Vehicle Dealer Bond

The State of North Dakota (North Dakota Department of Transportation) requires a minimum bond amount of $25,000 for all motor vehicle dealers.

Ohio Motor Vehicle Dealer Bond

The State of Ohio (Ohio Bureau of Motor Vehicles) requires a minimum bond amount of $20,000 for all motor vehicle dealers.

Oklahoma Motor Vehicle Dealer Bond

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.

Oregon Motor Vehicle Dealer Surety Bond

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.

CHANGE EFFECTIVE JANUARY 1, 2018

The governor signed SB 974 into law, with an effective date of January 1, 2018. The bill amends ORS 822.020 and 822.030. Here are the highlights:

  • Raises the bond amount from $40,000 to $50,000 (applies to new dealer certificates issued on or after January 1, 2018);
  • Decreases the amount a non-retail claimant can recover to $10,000;
  • For dealers dealing exclusively in motorcycles, mopeds, Class I all-terrain vehicles or snowmobiles, the bond is increased to $10,000 but only retail customers can bring a claim against the bond.

Pennsylvania Motor Vehicle Dealer Surety Bond

The State of Pennsylvania (Pennsylvania Department of Transportation) requires a minimum bond amount of $20,000 for all motor vehicle dealers.

Rhode Island Motor Vehicle Dealer Bond

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.

South Carolina Motor Vehicle Dealer Bond

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.

South Dakota Motor Vehicle Dealer 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.

Tennessee Motor Vehicle Dealer Surety Bond

The State of Tennessee (Tennessee Motor Vehicle Commission) requires a minimum bond amount of $20,000 for all motor vehicle dealers.

Texas Motor Vehicle Dealer Bond

The State of Texas (Texas Department of Motor Vehicles) requires a minimum bond amount of $20,000 for all motor vehicle dealers.

Utah Motor Vehicle Dealer Bond

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.

Vermont Motor Vehicle Dealer 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.

Virginia Motor Vehicle Dealer Bond

The State of Virginia (Virginia Department of Motor Vehicles) requires a minimum bond amount of $50,000 for all motor vehicle dealers.

Washington Motor Vehicle Dealer Bond

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.

West Virginia Motor Vehicle Dealer 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.

Wisconsin Motor Vehicle Dealer Bond

The State of Wisconsin (Wisconsin Department of Transportation) requires motor vehicle dealers to file a surety bond. The minimum bond amount varies.

Wyoming Motor Vehicle Dealer Bond

The State of Wyoming (Motor Vehicle Services Division of the Wyoming Department of Transportation) requires motor vehicle dealers to file a $25,000 bond.

 

Apply for Your Bond

Surety1 provides all bonds for business, licensing, construction, permit, and court purposes. To get started, apply online for the bond that you need.

1. Complete an online application.
2. One of our surety experts will call and email you with the firm quote and an agreement to sign.
3. Provide payment and your signed agreement, then you will receive your bond!

 

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Call us toll free at 877-654-2327. We have live surety bond agents available Monday – Friday, 8:00 – 4:30 PST. We’re glad to help!