What is the Auto Dealer Bond Requirement in Texas?
You need to post an auto dealer bond in the amount of $25,000 as part of your Texas auto dealer license application. This bond is also known as a Texas dealer bond or Texas motor vehicle dealer bond.
The bond is required of all auto dealers in the state with the exception of franchise dealers, travel trailer dealers, and trailer/semi-trailer dealers.
Here you can find a sample of the Texas motor vehicle dealer bond form and the type of information you will have to provide. You must submit the bond, along with the rest of your licensing paperwork, to the Motor Vehicle Division of the Texas Department of Motor Vehicles (TxDMV).
Why do I need this bond?
This bond is a dealer licensing requirement under Section 503.033 of the Texas Transportation Code. It guarantees your compliance with the conditions of this section which include:
- Paying all valid bank drafts, including checks drawn by the dealer to buy vehicles
- Transferring a good title for each vehicle offered for sale by the dealer
When you get bonded, you agree to comply with the Texas Transportation Code conditions. If you violate them, anyone harmed by your actions, as a result, can file a claim against your bond.
If you do not know what surety bonds are and want to know more about how bonding works, see our detailed ‘What is a surety bond’ guide!
What’s the Cost of the Texas Auto Dealer Bond?
For applicants with a good credit score, the cost of a $25,000 Texas auto dealer bond can be between $250 and $500.
The bond cost (also known as a premium) is a percentage of the total bond amount and is determined by the surety bond company based on your credit score. The higher your score - the lower your premium.
Other financial factors can also influence your bond premium. If you want to learn more about how bond costs are determined, see our detailed surety bond cost guide!
The table below shows the cost estimate of a $25,000 Texas auto dealer bond based on your credit score.
|Texas Auto Dealer Bond Cost Based on Credit Score|
|Bond Type||Bond Amount||Above 700||Between 700-650||Between 650-600||Below 600|
|Texas Auto Dealer Bond||$25,000||$250-$500||$375-$750||$500-$1,000||$750-$1,750|
Can I get bonded with bad credit?
Yes. If you have a low credit score, tax liens, or even bankruptcy, you can still get a Texas dealer bond. Applicants with low scores are typically considered a higher risk by sureties and are thus offered higher premiums.
Premiums for applicants with low credit scores are higher and can go up to 4% or more of the total bond amount. By working on improving your credit score and overall financial standing, you can also get a better premium every time you apply to renew your bond.
How Can I Get a Texas Auto Dealer Bond?
To get a free exact quote for your bond, simply fill out our short application form. It takes only 2 minutes and there are no obligations.
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For more information about your Texas motor vehicle dealer bond, feel free to call us at (866)-450-3412 anytime!
When Do I Need to Renew My Bond?
You need to renew your bond every two years after it is issued. Your license has the same term and they are renewed together.
How Can I Get Licensed As an Auto Dealer in Texas?
To get a license, you need to apply to the TxDMV. See our Texas dealer license guide for a detailed explanation of the licensing process and all the steps involved.
Do you have any further questions about getting an auto dealer surety bond in Texas? Call us at (866)-450-3412 to speak to one of our dealer bond experts.