What is an Auto Dealer Bond?

An auto dealer surety bond is a binding contractual agreement between three parties: the obligee (the state requiring the bond), the principal (the auto dealer), and the surety (the provider of the bond).

Auto Dealer Bond Agreement

It’s important not to confuse an auto dealer bond with insurance. Even though these bonds are sometimes wrongfully referred to as auto dealer bond insurance, they do not protect the dealer but the consumer.

Auto dealer bonds are a way to compensate dealers' customers if they become victims of fraud or unethical business practices. These include (but are not limited to):

  • Providing false information about the vehicle’s condition
  • Tampering with the odometer
  • Failure to honor oral or written warranties
  • Engaging in deceptive financing methods, such as “yo-yo” financing
  • Not paying state sales tax or other applicable fees
  • Not reporting sales
  • Failing to adhere to the conditions of the license

A claim can be made on the dealer bond if the dealership doesn’t follow all applicable laws and regulations of their state. If a legitimate claim is filed against the dealership, the surety will pay all relevant costs up to the amount of the surety bond it had underwritten. However, the dealer will have to reimburse these costs later on, which means avoiding claims is the best course of action.

Ready to apply? Start by getting a free no-obligations quote, so you can see our low prices!

Who Needs to Get an Auto Dealer Bond?

Whether you need to get bonded as a dealer or not depends on the specific regulations in your state. Some have different requirements for used-car, wholesale, auction and franchised dealers, for example.

States may also require surety bonds for the licensing process of other type of related businesses, such as motorcycle, snowmobile and boat dealers, salvage dealers, salespersons, designated agents, parts recyclers, and others. These types of surety bonds may not be referred to as auto dealer bonds, but they are, in essence, the same thing.

Regardless of the type of auto dealer bond you need, it’s illegal to operate your business without it. Your license application will not be complete without one, and selling cars without a valid surety bond can lead to a fine and the revocation of your license.

How Much Does an Auto Dealer Bond Cost?

Depending on the state, the required motor vehicle dealer bond amounts can vary widely, from as little as $5,000, up to $100,000. But these amounts are only the maximum coverage bonds provide for claimants.

Your premium is a percentage of the total bond amount, usually between 0.75% and 3%. For example, а $50,000 bond will cost you anywhere between $375 and $5,000 per year.

This is the standard market rate for applicants with good credit and a clean credit report. The cost for less qualified applicants goes up to 3%-10%. However, your premium also depends on other specifics, such as your professional experience, and the overall financial strength of your business. The better these factors are, the smaller the cost will be.

Check out our auto dealer bond cost guide for more useful information.

Tips for reducing your premim

Check out our surety bond cost guide for more detailed information about bond prices, and what you can do to lower your premium. Some ways include:

  • Cleaning up credit report red flags, such as tax liens or civil judgments
  • Showcasing liquid assets and strong financials
  • Carefully choosing your surety bond provider
  • Demonstrating your industry experience

The surety bond cost calculator below can also help you get an estimate of your yearly premium. You can test how much of an impact a different credit score could have on your premium. Keep in mind that it provides only ballpark estimates. For an exact quote, simply submit our online application.

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Getting Bonded with Bad Credit

If you have less-than-perfect credit, or even past bankruptcies, tax liens or civil judgments, Bryant Surety Bonds can still help you get bonded. We operate a bad credit surety bond program, which helps high-risk applicants get the bonds they need.

Call our surety agents at (866) 450-3412 and they’ll be happy to provide personalized advice on how you can build a strong application.


Getting your bond is a straightforward process. You can apply online and get a quote in minutes, or call (866)-450-3412 and one of our auto dealer bond experts will guide you through the application process.

To get your exact bond price, you may have to supply a few required personal and financial details, such as:

  • Personal financial statements
  • Business financial statements
  • Ownership structure (sole proprietorship, LLC, corporation, etc.)
  • Proof of liquid asset ownership
  • Resumé

Watch this short video for some more detailed information on questions that first-time applicants frequently have:

These may be necessary, so that the surety bond company can make a better assessment of your business’s likelihood of triggering and paying back claims. So if you have good financials and liquid assets, such as cash on hand, demonstrating them can lower your bond costs. The same is true for your industry experience: a resume that shows you’re seasoned in the industry is a strong signal of trustworthiness.

Start your surety bond application today! Why us?
  • Quick turnaround - just 1-2 business days
  • Tailor-made advice on building a strong application
  • Exclusive bad credit programs

Renewal Deadlines

Some states don't have pre-determined expiration dates for their motor vehicle dealer bonds. In these cases the bonds are usually valid for one year since the issue date. Others states have a fixed expiration date, meaning dealers must make sure they renew their bonds prior to that date. To stay up-to-date, check out the dates for your particular state below.

Bond Renewal Deadlines by Month
March 31st Dealers in New Jersey and New Mexico renew their bonds before March 31st each year, whereas Georgia dealers only need to do it on even years.
April 30th Florida dealer bonds expire on that date each year.
June 30th Bond renewal is due before June 30th for West Virginia car dealers.
September 30th Renewal deadline for all Alabama dealers.
December 31st Dealer bonds expire on December 31st for the followings states: Illinois, Kansas, Louisiana, Missouri, Montana, Nebraska, Oklahoma, Rhode Island.
Other deadlines Other non-continuous dealer bonds don’t have a fixed date, but they do have expiration dates nonetheless. Oregon dealer bonds, for example, are valid for 3 years and expire on the last day of the month they were issued. The same is true for Texas and Tennessee dealer bonds, though their validity is 2 years.

Renewal Application

The renewal application is similar to the initial application but shorter. You’ll get a new quote, which may be lower if your financial or credit situation has improved over the past year.

If you have acquired your dealer bond with Bryant Surety Bonds, we make sure you never forget a deadline by sending several reminders– 30, 60 and 90 days ahead of the deadline. It is advisable to renew your bond as early as possible. You may have to pay late or reinstatement fees if you miss your deadline, or you may have to start the application process from the beginning.

Below are some of the most commonly requested car dealer bonds.


All Texas dealers need to post a $25,000 bond and pay premiums once every two years.


The Department of Highway Security requires a $25,000 dealer bond from all licensed dealers in the state.


Retail dealers need a $50,000 bond, while the amount goes down to $10,000 for motorcycle, all-terrain and wholesale-only dealers.


Used-car dealers in the state need to have a valid $35,000 bond. For used car parts dealers the amount is $10,000.

New York

Both new and used-car dealers need a surety bond to get licensed, however the amounts are different. Used-car dealer bond amounts can be either $20,000 or $100,000, while bonds for franchised dealers are fixed at $50,000.


The process of getting licensed as a designated agent in Illinois involves posting a $20,000 surety bond.

Dealer Bond Requirements by State

To find out particular information about your state, such as obligee, bond cost, expiration dates and others, select your state from the map below.

Choose Your State

How to Become an Auto Dealer

States have varying requirements for auto dealers. While posting a motor vehicle dealer bond is always one of them, there are a number of others that you will need to fulfill before you can get your license. Some of the common ones include:

  • Buying garage liability insurance
  • Passing a background check
  • Paying application fees
  • Getting a zoning approval
  • Displaying a business sign

For more information, you can check out our comprehensive infographic guide on how to become a car dealer.

Note: Verify all information with your state licensing authority first, because licensing requirements can frequently change. We have created dealer licensing guides for a number of states, which you are welcome to use as reference: