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Luke Bochansky
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Auto Dealer Surety Bond


In order to obtain an auto dealer license, auto dealers in most states must file a surety bond with the state's Department of Motor Vehicles (DMV) before they can get their license. The auto dealer bond provides protection for customers, sellers, financial organizations and/or government agencies if a dealer commits fraud or unethical business practices. The surety bonds regulate the industry by helping entities recover from any resulting financial loss.


Common auto dealer bonds are:



Each of these bonds works effectively the same way. If a bonded motor vehicle dealer breaks the terms of the bond, the injured party (customer, bank, etc.) can make a claim against the bond to get compensated for their loss.


The cost of your Surety Bond will be dependent on a number of factors. Largely, the cost of the bond will depend on the surety bond amount, your credit and financial credentials. If your financial credentials are strong, you will qualify for the standard market and your premium could be be as low as 1% of the face value of the bond. Conversely, those with poor credit will have to obtain a surety bond through the secondary market and will likely pay a premium that's a higher percentage of the bond amount.


By: Luke Bochansky