Texas Auto Dealer Bond Overview

  • Bond Name: Motor Vehicle Dealer Bond, MVD Bond, DMV Surety Bond
  • Obligee: Texas DMV Motor Vehicle Division
  • Required Expiration Date of Bond: Must be valid for two years from the date of issuance of the license and expire on the last day of a month
  • Surety Bond: It is not continuous, so you need to renew it every two years, along with your dealer license. The term of your license is based on your bond term datesIn order to obtain an auto dealer license in the state of Texas, you will be asked to post a Texas auto dealer bond, or MVD bond, as part of your application process.

Texas Auto Dealer Bonds serve as a guarantee that you will comply with the regulations for auto dealers in Texas. Just like all other surety bonds, Texas dealer bonds serve to protect end clients from fraud and financial harms. They work as an extended line of credit to auto dealers, in case a claim is filed against them.

Texas motor vehicle dealer bonds are a three-way agreement between the principal (the car dealership), the obligee (the State of Texas) and the surety company that issues your auto dealer bond.

Please note that in the case of a legitimate claim against your Texas dealer bond, the surety who issued your bond steps in and helps resolve the claim up to the penal amount of the bond. Since surety bonds work like an extended line of credit, anything the surety pays to resolve a claim will have to be reimbursed by you to the surety afterwards. This is a condition stated in every indemnity agreement that is signed prior to obtaining your motor vehicle dealer bond.

It is therefore advisable and in everyone’s interest that claims be avoided altogether, because they can create significant financial burdens on dealerships and harm their reputation.

Texas Auto Dealer Bond Cost

In order to successfully complete your application for an auto dealer license in the state of Texas, you need to post a $25,000 Texas auto dealer bond.

What you actually need to pay to obtain this bond is only a percentage of the whole amount, usually between 1% and 4% of the total bond amount. This is called a premium. At standard market rates, your bond cost could be between $250 and $1000.

Numerous factors are taken into account when determining the exact amount of your bond. The most important among them is your personal credit score. If it is high, you are likely to receive a lower rate. Other factors at play are personal and business financials, the liquidity of your business and more.

Please note that you premium is not fixed and that by improving your credit score or your business’s standing, you can improve your auto dealer bond premium over time and receive better rates.

Which surety bond company you work with is also of importance. By working with Bryant Surety Bonds your rate will be sourced from a large network of professional A-rated and T-listed surety companies. In this way, you will receive the best possible rate on your bond.

If you would like to know what and how exactly determines the cost of surety bond, make sure to visit our surety bond cost page. And if you would like to receive a ballpark estimate of your Texas auto dealer bond, use the bond cost calculator in the right sidebar.

Bad Credit Program

If you have a low credit score, tax liens or even a bankruptcy, you can still get a Texas auto dealer bond. Bryant Surety Bonds’ bad credit surety bond program is specially devised to meet the needs of high-risk applicants who want to get bonded.

As a high-risk applicant you may have to pay a higher premium due to the greater risk involved in getting bonded. Bad credit program premiums are usually between 5% and 15% of the total bond amount. By working closely with us and making the right changes to your business strategy, you can improve your financial standing over time and lower your bond rate.

Get Your Texas Auto Dealer Bond TodayTo get your Texas dealer bond you simply need to аpply online. You will then receive a quote on your bond, free of charge and with no obligations. To continue the bonding process you will need to present a number of business and financial documents. These are necessary so that we can provide you with the best rate.

Don’t hesitate to call us at (866)-450-3412 if you have any questions regarding the bonding process. Our team of surety bond experts is available to answer all your questions and help guide you through the application process if you experience difficulties.

How to Get a Texas Auto Dealer License

For a new dealer license in Texas, the first step is to obtain a General Distinguishing Number (GDN). This requires you to have a permanent place of business, official business signage, enough space to display five vehicles for sale, and more. You’ll need a GDN whether you sell new cars or used. If you also sell motorcycles, RVs, or other trailers, you’ll need a separate GDN for each class of vehicles. Each original GDN costs $700 and another $400 to renew every 2 years.

Remember that you cannot get a Texas auto dealer license if you are not bonded. A bond is one of the state requirements for obtaining a license. Start today! Get Bonded!

About the author:
Todd Bryant
Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post, Entrepreneur.com, Azcentral.com and many more.