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Starting a dealership may be difficult and costly, therefore it’s critical to gather the necessary paperwork and select a reputable surety firm to help get you the right MVD Bond for your business. This easy-to-understand Car Dealer License Guide details the requirements for obtaining a license in each state. The surety bond might be referred to as a Motor Vehicle Dealer Bond, a Car Dealer Bond, an Auto Dealer Bond, or an MVD Bond.
The process of applying for a bond might be complicated for many candidates. Auto dealers will have a thorough knowledge of the licensing and bonding procedure by the end of this tutorial. However, a surety bond may be required before a business can be licensed to assure that it will comply with state and/or federal standards.
Certain legal duties must be met before launching any type of business. The requirements differ depending on the state and city of operation. Visit the US Small Business Administration’s website for further information on business license types. The state business licensing offices are divided into categories. Select the state in which the company will operate. The next page will detail crucial details such as where to obtain a business license and what sorts of state licenses are necessary.
In Arizona, for example, not all firms are required to be licensed. The fundamental categories of business licensing, such as state transaction privilege tax and regulatory licenses/permits, are also available.
Fortunately, the SBA website has a wealth of other resources, including assistance with writing a business plan, selecting a business structure and location, and access to resources for beginning a new firm.
To operate in most states, motor vehicle dealers must get a license and a surety bond. Who is deemed a “motor vehicle dealer” varies by state, but the general guideline is that anyone who buys or sells 2 to 6 automobiles per year must have a license.
The Surety Place will provide an Offer Sheet which consists of the bond quote. The customer will have the opportunity to review and discuss the quote before approving and signing our offer. We have a secure online payment portal that our clients can use to pay the bond cost in full via credit card or EFT. We also accept checks & bank wires.
Surety underwriters will check your customer’s personal credit to see whether they are eligible for motor vehicle dealer bonds and what their rate will be. The majority of carriers utilize a “soft check,” which means the credit review will have no impact on the applicant’s credit.
Other parts of the dealer’s application will be considered by underwriters, but credit scores and their underlying data will continue to be the key underwriting tool for auto dealer bonds.
An auto dealer surety bond, like many other forms of surety bonds, offers a financial guarantee that aids in the regulation of the auto dealer sector. Customers, financial institutions, and/or government authorities, as well as the sellers, are all protected by the bond. The bond helps the party at risk recoup any financial losses if the auto dealer commits fraud or conducts business unethically. A surety bond gives a company reputation and reliability.
As previously indicated in this book, the automobile dealer surety bond can be referred to in a variety of ways. The sort of car dealer surety bond required is determined by the location and type of business. Despite the fact that the auto dealer bond may have a somewhat different name, it functions in the same way. If a bonded motor vehicle dealer violates the terms of the surety bond, a claim against the bond can be filed, and the surety company will pay up.
The following are the five most prevalent forms of motor vehicle bonds:
Used vehicle sellers must post a $10,000 surety bond, while new car dealers must post a $25,000 surety bond, according to the Alabama Department of Revenue’s Motor Vehicle Division.
Dealers who exclusively sell motorcycles must submit a $25,000 surety bond with the State of Alaska (Alaska Commissioner of Administration), whereas all other vehicle dealers must file a $50,000 surety bond.
All motor vehicle dealers in Arizona are required to post a $100,000 bond with the Arizona Department of Transportation.
All motor vehicle dealers in Arkansas are required to post a $25,000 bond with the Arkansas Department of State Police.
Motorcycle dealers, motorcycle lessor-retailers, ATV dealers, and wholesale-only dealers who sell less than 25 cars per year must submit a $10,000 surety with the California Department of Motor Vehicles. A $50,000 bond is required for all other commercial car dealers.
All motor vehicle dealers in Colorado are required to post a $50,000 bond with the Colorado Motor Vehicle Dealer Board.
Motor vehicle repairers must post a $5,000 bond, motor vehicle leasing/renting firms must post a $10,000 surety, and auto dealers must post a $50,000 bond, according to the Connecticut Department of Motor Vehicles.
All motor vehicle dealers in Delaware are required to post a $25,000 bond with the Delaware Division of Revenue.
The state of Florida (Florida Department of Highway Safety and Motor Vehicles) requires all motor vehicle dealers to post a $25,000 bond.
All motor vehicle dealers in Georgia must post a $35,000 bond with the State Board of Registration’s Used Motor Vehicle Dealers Division.
Motorcycle/scooter dealers must post a $10,000 bond, new motor vehicle dealers must post a $50,000-$200,000 bond, and used motor vehicle dealers must post a $25,000-$100,000 bond, according to the State of Hawaii (Motor Vehicle Industry Board Department of Commerce & Consumer Affairs PVL Licensing Branch).
Sellers selling motorcycles, ATVs, or snowmobiles must deposit a $10,000 bond with the Idaho Transportation Department, while wholesale dealers must post a $40,000 bond. A $20,000 bond is required for all other categories of car sellers.
A dealer who sells more than five automobiles in a given year must register with the Illinois Secretary of State.
All motor vehicle dealers in Indiana are required to post a $25,000 bond with the Indiana Secretary of State.
The state of Iowa (Iowa Department of Transportation) requires all motor vehicle dealers to post a $75,000 bond.
All motor vehicle dealers in Kansas must post a bond of at least $30,000 with the Kansas Department of Revenue.
All motor vehicle dealers in Kentucky are required to post a $15,000 bond with the Kentucky Motor Vehicle Commission.
All motor vehicle dealers in Louisiana are required to post a $15,000 bond with the Louisiana Motor Vehicle Commission.
The State of Maine (Maine Department of Secretary of State, Bureau of Motor Automobiles) demands a $5,000-$25,000 bond, depending on the number of vehicles sold each year.
The Maryland Motor Vehicle Administration (MMVA) demands a bond in the range of $15,000 to $300,000, depending on the number of vehicles sold annually and whether the vehicles are new or used.
All motor vehicle dealers in Massachusetts are required to post a $25,000 bond with the Massachusetts Registry of Motor Vehicles.
All motor vehicle dealers in Michigan are required to post a $10,000 bond with the Michigan Secretary of State.
Dealers of boats, small horse trailers, mopeds, snowmobile dealers, and any trailer hauling less than 15,000 pounds must post a $5,000 bond with the Minnesota Department of Public Safety. A $50,000 bond is required for all other auto sellers.
A $25,000 bond is required by the State of Mississippi (State of Mississippi Motor Vehicle Commission) for wholesale and used motor vehicle dealers. If the dealer does business in more than one location in Mississippi, a $100,000 ‘blanket’ bond is required. Instead of bonding each site individually, a blanket bond covers many business locations.
All motor vehicle dealers in Missouri are required to post a $50,000 bond with the Missouri Department of Revenue.
Dealers of boats, snowmobiles, non-street legal motorbikes, and quadricycles must submit a $5,000 bond with the State of Montana (Montana Attorney General). A $15,000 bond is required of dealers of street-legal motorbikes or quadricycles. All other new and used car sellers are required to post a $50,000 bond.
All motor vehicle dealers in Nebraska are required to post a $50,000 bond with the Nebraska Motor Vehicle Industry Licensing Board.
Dealers of utility trailers or boat trailers weighing less than 3,500 pounds must file a $10,000 bond with the Nevada Department of Motor Vehicles. Dealers of motorbikes, horse trailers, and utility trailers weighing more than 3,501 pounds must post a $50,000 bond. A $50,000 bond is required for all other new and used car dealers.
All motor vehicle dealers in New Hampshire must post a $25,000 bond, according to the New Hampshire Department of Safety Director of the Division of Motor Vehicles.
The state of New Jersey (New Jersey Motor Vehicle Commission) requires all motor vehicle owners to post a $10,000 bond.
Motorcycle sellers must post a $12,500 bond, while new and used automobile dealers must post a $50,000 bond, according to the New Mexico Vehicle Division.
New automobile sellers must post a $50,000 bond with the state of New York (New York Commissioner of Motor Vehicles). Used car sellers must post a $10,000 bond if they sell fewer than 200 automobiles per year, and a $25,000 bond if they sell 200 or more vehicles per year.
All motor vehicle dealers in North Carolina are required to post a $50,000 bond with the North Carolina Division of Motor Vehicles.
All motor vehicle dealers in North Dakota are required to post a $25,000 bond with the North Dakota Department of Transportation.
All motor vehicle dealers in Ohio must post a bond of at least $20,000 with the Ohio Bureau of Motor Vehicles.
All motor vehicle dealers in Oklahoma must post a $25,000 bond (Oklahoma Used Motor Vehicle and Parts Commission for Used Cars or Oklahoma Motor Vehicle Commission for New Cars).
Motorcycle, moped, and all-terrain vehicle dealers must post a bond of at least $2,000, and all-terrain vehicle sellers must post a bond of at least $10,000.
All motor vehicle dealers in Pennsylvania are required to post a $20,000 bond with the Pennsylvania Department of Transportation.
All motor vehicle dealers in Rhode Island must post a $50,000 bond with the Rhode Island Division of Motor Vehicles-Dealers’ License and Regulations Office.
All new or used dealers must post a $30,000 bond with the South Carolina Department of Motor Vehicles, while wholesale auctioneers, travel trailers, and motorbike dealers must file a $15,000 bond.
Motorcycle and snowmobile dealers must post a $5,000 bond, trailer and emergency vehicle (over 3,001 lbs) dealers must post a $10,000 bond, boat dealers must post a $20,000 bond, new and used vehicle dealers must post a $25,000 bond, and car action agencies must post a $50,000 bond, according to the South Dakota Department of Revenue and Regulation’s Division of Motor Vehicles.
All motor vehicle dealers in Tennessee are required to post a $20,000 bond with the Tennessee Motor Vehicle Commission.
All motor vehicle dealers in Texas must post a bond of at least $20,000 with the Texas Department of Motor Vehicles.
Small trailer dealers and new or used vehicle sellers must deposit a $75,000 bond, while motorcycle and small trailer dealers must post a $10,000 surety bond, according to the Utah Motor Vehicle Enforcement Division.
The Vermont Commissioner of Motor Automobiles mandates a minimum bond of $20,000 and a maximum value of $35,000, based on the number of vehicles sold each year.
All motor vehicle dealers in Virginia are required to post a $50,000 bond with the Virginia Department of Motor Vehicles.
Vehicle wreckers must post a $1,000 bond, dealers who sell 15 vessels worth more than $2,000 per year must post a $5,000 bond, tow truck operator dealers must post a $5,000 bond, manufactured travel trailer dealers must post a $20,000 bond, and manufactured mobile home dealers must post a $40,000 bond, according to the Washington State Department of Licensing.
All motor vehicle dealers in West Virginia are required to post a $25,000 bond with the West Virginia Department of Motor Vehicles.
Motor vehicle dealers in Wisconsin are required to submit a surety bond with the Wisconsin Department of Transportation. The amount of the minimal bond varies.
Motor vehicle dealers in Wyoming must post a $25,000 bond with the Wyoming Department of Transportation’s Motor Vehicle Services Division
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We have the unique capacity to write your bonds when no one else can, and we will stand behind you in support to reach your agency or company objectives, thanks to our industry knowledge and expertise, as well as our ever-growing specialty programs. We take pride in our customer service at The Surety Place! Give us a call at 480-419-2456 if you have any questions about a bond placement.