A Colorado auto dealer bond is a surety bond required by the Colorado Department of Revenue’s Auto Industry Division (CDOR) to ensure dealers follow ethical and lawful business practices. The bond protects customers and the state from losses resulting from misconduct, such as false advertising, warranty violations, or failure to pay taxes. The bond requirement is mandated under C.R.S. § 44-20-102 (formerly § 12-6-111).
An auto dealer bond is required from new and used motor vehicle dealers, wholesale dealers, and powersports dealers (both new and used), as well as independent or franchise operations. Under Colorado law, anyone who sells three or more vehicles in 12 months is considered a dealer and must be licensed and bonded. The bond involves three parties:
- Principal: the vehicle dealer
- Obligee: the CDOR
- Surety: the bond provider
Colorado Auto Dealer Bond at a Glance
- Purpose: Ensures customers are protected from dishonest or fraudulent practices by licensed dealers.
- Who Needs It: All motor vehicle dealers and salespeople operating in Colorado.
- Regulating Authority: Colorado Department of Revenue (CDOR), Auto Industry Division.
- Bond Amount: $50,000 for most dealers, $5,000 for small trailer dealers (under 2,000 lb), and a separate $15,000 bond for each motor vehicle salesperson employed by the dealer.
- Premium Range: Rates typically begin around 1% of the bond amount, based on credit and financial history.
How Much Does a Colorado Auto Dealer Bond Cost?
The Colorado auto dealer bond is set at $50,000 for most dealers, $15,000 for salespersons, and $5,000 for small trailer dealers. Your bond premium depends on factors such as credit score, financial history, and business experience.
Applicants with excellent credit scores qualify for standard market rates of 1%–3% of the total bond amount. For a $50,000 Colorado auto dealer bond, this means an annual cost of just $500–$1,000. Applicants with good but not perfect credit may see rates in the 3%–4% range.
| Bond Type | Bond Amount | Bond Cost |
|---|---|---|
| Motor Vehicle Dealer (New/Used) | $50,000 | Starts at $500 |
| Powersports/Used Powersports Dealer | $50,000 | Starts at $500 |
| Wholesale Dealer | $50,000 | Starts at $500 |
| Motor Vehicle Salesperson | $15,000 | Starts at $150 |
| Small Trailer Dealer (<2,000 lb) | $5,000 | Starts at $100 |
Use our bond cost calculator below to get an instant estimate for your Colorado auto dealer bond. Simply enter your required bond amount and credit score to view your estimated rate.
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Get a free exact quote Get another estimateHow to Get a Colorado Auto Dealer Bond
Getting bonded in Colorado is quick, simple, and fully online. In most cases, you can complete the process in just three easy steps:
- Complete a short online application.
Provide basic information such as your dealership name, contact details, and the bond amount required. - Receive a free, personalized quote the same day - with no obligations.
- Get your bond: Once you accept your quote, you’ll receive your official Colorado auto dealer bond certificate, ready to file with your Auto Industry Division license application.
How to Get a Colorado Auto Dealer License
To operate legally as a motor vehicle dealer or wholesaler in Colorado, you must complete the following steps required by the CDOR – Auto Industry Division:
- Maintain a minimum net worth of $100,000. Ensure that at least one owner or officer has a credit score of 701 or higher (as required by the Dealer Board).
- All applicants must undergo a background investigation and submit supporting court documents if applicable.
- Fill out the official Dealer/Wholesaler Application (Form DR 2109) and any required addenda.
- New dealer and wholesaler applicants must complete an approved Pre-Licensing Education Program and submit the certificate.
- Pass the Mastery Exam and file the DR 2097 Examination Affidavit.
- Schedule fingerprinting with IdentGO and provide the official verification form.
- File your auto dealer surety bond.
- Submit a copy of your Colorado ID.
- Provide all required business formation documents, including articles of incorporation/organization, trade name registration, operating agreement or bylaws, and a lease or proof of ownership for your business location.
- Complete and include the DR 2640 Dealer Plate Affidavit.
- Register with the Colorado Department of Revenue: Complete the State Tax Withholding Account Application (Form CR 0100AP) and obtain a sales tax license.
- Pay the license fees (approximately $455 for a motor vehicle dealer license, plus plate and bond costs).
- Submit your complete application packet to the AID. Once approved, you will be issued your Colorado Motor Vehicle Dealer License.
Colorado Auto Dealer Bond Renewal
Colorado auto dealer bonds are continuous — once filed with the Auto Industry Division, the bond stays in effect from year to year through a continuation certificate issued by your surety, and remains in force until either party files a 45-day written cancellation notice (10 days for nonpayment, or within the first 60 days of coverage). You don’t need to file a new bond every year. The same bond stays on record with the state, and your surety simply collects the premium each year (or in multi-year terms, often at a discount). To keep your bond active, you’ll typically receive a renewal invoice from your surety 30–90 days before the premium is due. Pay it on time, and the surety files the continuation certificate with the AID. If your bond lapses or is canceled, your dealer license can be suspended or revoked — so it’s important to keep your premium current and notify your surety promptly of any changes to your business name, ownership, or address.
Note that the dealer license itself is renewed each year separately. Colorado dealer licenses expire on June 30 every year, regardless of when they were issued, and the AID mails a renewal packet about 30 days before that date. Late renewals are subject to a 30-day grace period (with late fees), after which you must reapply as a new applicant.
FAQs
Can I get a Colorado auto dealer bond with bad credit?
Getting bonded with bad credit can be more challenging, as many sureties hesitate to approve these applicants. However, with Bryant Surety Bonds’ Bad Credit Surety Bond Program, you can still secure approval at rates between 5%–10%, thanks to our exclusive partnerships with leading surety providers. Most bonds are issued without requiring collateral, even for higher-risk applicants. Improving your credit over time can help you qualify for lower rates at renewal later on, reducing your bond cost in future years.
What happens if a claim is made against my Colorado dealer bond?
If a customer or the state files a valid claim for losses caused by your business, the surety will pay up to the bond amount. You are then required to repay the surety in full.
Can I transfer my Colorado auto dealer bond if I change my dealership name or ownership structure?
It depends on the type of change. A simple legal name change or address update for the same licensed entity can typically be handled through a bond rider rather than a new bond. A change in business entity (for example, sole proprietor to LLC, or one corporation to a new corporation), however, generally requires a new license application and a new bond — the bond from the prior entity cannot transfer. Notify your surety promptly of any business changes so they can confirm whether a rider or a new bond is required.
Do I need separate bonds if I operate multiple dealership locations in Colorado?
Generally, one bond is tied to one license. If you operate multiple licensed entities or locations, you may need additional bonds. The AID will confirm your specific requirements.
How long does it take to get a Colorado auto dealer bond?
You can receive a free quote within minutes and have your bond issued the same day once payment is made.
Will applying for a Colorado auto dealer bond affect my credit score?
No. Surety companies use a soft credit pull to evaluate your application, which does not impact your credit score and is not visible to lenders. The check is used solely to determine your bond premium rate. You can request a free quote without any effect on your credit.
Why does Colorado require a separate bond for each salesperson?
Colorado is one of the very few states with a dual-bond structure. In addition to the $50,000 dealer bond, the dealership must post a separate $15,000 surety bond for each motor vehicle salesperson it employs (per C.R.S. § 44-20-413). The salesperson bond is tied to the individual, not the role, so a new bond is required when a salesperson changes employers. A dealer with five salespeople, for example, needs six bonds in total: one $50,000 dealer bond plus five $15,000 salesperson bonds. The good news is that salesperson bond premiums are typically very low (around $90 each).
