Alabama Auto Dealer Bond Overview

An Alabama auto dealer bond serves as a guarantee that a licensed and bonded auto dealer in Alabama will comply with Alabama Motor Vehicle Division (DMV) requirements.

If the auto dealer (the bond’s principal) does not comply with the requirements, the auto dealer bond serves as protection for the state and the consumers (the obligees), who may have suffered financial losses as a result. If this happens, the surety is there to cover for such losses up to the full amount of the bond. In essence, this is how all surety bonds work.

Obtaining an Alabama motor vehicle dealer bond is part of the licensing requirements for all motor vehicle dealers applying for, or renewing, the following licenses:

  • New and Used motor vehicle dealers
  • Wholesale dealers
  • Reconditioners and Rebuilder
  • Motorcycle and Trailer dealers (as of August 1, 2014)

As of August 1, 2014, a $25,000 continuous Alabama dealer bond must be posted for all of the above licenses. Since the bond is a continuous one, a continuation certificate has to be submitted upon yearly renewal of the auto dealer license. The bond, the continuation certificate, and the license application documents must all be submitted to the Alabama Department of Revenue.

Read on for more information on licensing and renewal, as well as Alabama auto dealer bond cost.

Alabama Auto Dealer License Application and Renewal

To receive a new license or renew their license, a dealer has to apply, and pay licensing fees, through the Department’s website. They must then print the transmittal sheet and send it to the Alabama Department of Revenue, along with all other supporting documents. The Department’s postal address is:

Alabama Department of Revenue
Motor Vehicle Division
P O Box 327643 Montgomery,
AL 36132-7643

Additional licensing requirements and supporting documents when applying for an Alabama auto dealer license or for the renewal of a license are:

  • A state sales tax number (issued by the Department of Revenue)
  • A blanket motor vehicle liability insurance
  • A permanent business location and a permanent sign for the dealership
  • Include information on the number of sold vehicles during the previous year
  • $25,000 Alabama dealer bond

All licenses and bonds issued to auto dealers in Alabama are only valid for and within the state of Alabama. If you want to open a dealership in another state, you have to apply there for a license and bond separately.

Dealer licensing begins on October 1st of every year and ends on September 30th on the following year. All Alabama auto dealer licenses expire on September 30th of every year.

The deadline for renewing one’s dealer license is until October 31st on the following year after the license was issued. If a dealer fails to renew their license by then, or if their bond is cancelled, their license is revoked.

Alabama Auto Dealer Bond Cost

The cost of your Alabama auto dealer bond is not the same as the bond amount of $25,000. The bond amount is the total amount of coverage which your surety will extend to your obligees in the case of a legitimate claim against your bond.

The cost of your Alabama motor vehicle dealer bond on the other hand is only a percentage of the total bond amount. The cost or premium of your bond is determined mostly on the basis of your personal credit score. If you have a high personal credit score, the cost of your bond will range between 1% and 4% of the total amount.

In other words, at standard market rates your $25,000 Alabama dealer bond will cost between $250 and $1000.

Improving your credit score over time can help you reduce your bond rate and pay less next time you are renewing your auto dealer license.

You can further lower your rate by working with the right surety bond agency. At Bryant Surety Bonds, we pride ourselves in finding high-quality bonds at the best rates. Because we work with some of the best surety bond companies in the industry, all of which are A-rated and T-listed, we can provide our clients with exclusive rates which few can match.

For an estimate of your Alabama auto dealer bond cost use our surety bond calculator in the right sidebar. If you’d like to receive a free and exact quote on your bond, simply apply online or call one of our surety bond experts at (866)-450-3412.

If you want to learn more about surety bond rates and how they are calculated, visit our surety bond cost page.

Bad Credit Program

Applicants with less than perfect credit who still want to obtain an Alabama motor vehicle dealer bond may do so through our Bad Credit Surety Bond Program. Our program is specifically devised for these among our applicants who present a greater risk due to a low credit score, tax liens, bankruptcies or other financial issues.

Due to the greater risk involved with bonding such applicants, rates under our bad credit program range between 5% and 10% of the total amount. Nevertheless, we always do our best to find the lower rate possible for all our applicants and work together with them to address their needs.

Get Your Alabama Auto Dealer Bond Today

Want to get your Alabama auto dealer bond? Apply online and you will soon receive a free exact quote on your bond in minutes.

Do you need more information? Just call us at (866)-450-3412! Our auto dealer bond experts at Bryant Surety Bonds are here to help with all of your questions. Apply today!

About us:
Bryant Surety Bonds, Inc. is a surety bond agency based in Pennsylvania. Licensed in all 50 states and with access to over 20 T-listed, A-Rated bonding companies, we have the contacts, expertise, and top service to provide you with a hassle-free experience, all while offering competitive rates for your surety bond.