If you plan to sell vehicles in Delaware, an auto dealer bond is mandatory for DMV licensing. The Delaware Division of Motor Vehicles requires this surety bond to protect the public by ensuring that dealers comply with state laws and fulfill their obligations. Maintaining continuous coverage of the bond keeps a dealer’s license in good standing.
Delaware Auto Dealer Bond at a Glance
- Purpose: To protect consumers from financial loss caused by a dealer’s dishonest conduct.
- Who needs it: Retail-seller motor vehicle dealers who self-finance vehicle sales without charging interest, and who are not already bonded with the State Bank Commissioner under Title 5, Chapter 29.
- Regulating authority: Delaware Division of Motor Vehicles
- Bond amount: $25,000
- Premium rate: 1–3%. The exact percentage depends on factors such as financial profile, credit strength, and the applicant’s experience in vehicle sales.
Delaware motor vehicle dealers are licensed under Title 21, Chapter 63 of the Delaware Code. The most common dealer types are:
- New motor vehicle dealers: Sell new vehicles (incl. motorcycles, mopeds, trailers, mobile homes).
- Franchised dealers: Sell new vehicles under a manufacturer/distributor franchise (incl. RV lines/models).
- Used motor vehicle dealers: Sell pre-owned vehicles (may also handle motorcycles, mopeds, trailers, mobile homes).
- Auction dealers: Conduct vehicle sales by auction.
How Much Does a Delaware Auto Dealer Bond Cost?
The auto dealer bond amount required in Delaware is $25,000.
| Bond Type | Bond Amount | Bond Cost |
|---|---|---|
| All motor vehicle dealers | $25,000 | Starts at $250 |
When you’re applying for a Delaware auto dealer bond, you won’t pay the full bond amount upfront. Instead, you’ll pay a bond premium - a small percentage of the total required amount.
That premium is based on your financial profile, including personal credit, business history, and overall financial stability. Underwriters consider factors like credit score and payment history, public records (judgments or liens), tax filing status, cash flow and net worth, outstanding debt, and your experience and compliance record as a dealer.
On average, well-qualified applicants pay about 1%–3% of the bond amount annually. If your profile shows fair credit, limited experience, or uneven financials, you can still qualify, but rates typically fall in the 3%–5% range.
However, if your profile is consistently weak across all key areas, including poor credit, unstable finances, and past compliance issues, the surety may either set the premium as high as 10%. If you happen to be in that bracket, you don’t need to worry: Bryant Surety Bonds runs a Bad Credit Surety Bond Program and works with top-tier sureties to help secure accessible bonding options despite higher risk.
To understand what your bond may cost, use our Surety Bond Cost Calculator. Enter a few details about your bond type, location, and credit standing, and the tool will show an estimated premium based on that information.
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How to Get a Delaware Auto Dealer Bond
The process is completed online in three straightforward steps.
- Complete the online form. Provide your information, location, and required bond amount.
- Review your quote. You’ll receive a no-obligation quote - typically the same business day.
- Finalize your bond. Upon approval and payment, your bond certificate will be issued and ready for filing.
Bryant Surety Bonds is licensed (#3000570195) to issue Delaware auto dealer bonds and partners with leading surety companies to ensure timely, accurate processing.
How to Get a Delaware Auto Dealer License
To obtain a license, dealers must submit their application (Form MV29) and Signature Authorization (Form MV26) along with the following documents:
- Surety bond
- Business license - issued by the Department of Finance, Division of Revenue
- Proof of residency and a valid Delaware driver’s license - evidence that the applicant has lived in the state for 90 days before applying, except for franchised and new vehicle dealers, who are exempt.
- Criminal history and fingerprint records - required for first-time applicants and for those whose previous licensing occurred more than five years ago.
- Proof of dealership location, owned or leased, that meets all zoning rules set by the local authorities. The application must include a copy of the lease contract.
- An entrance permit from the Department of Transportation - if the property fronts a state-maintained road.
- Evidence of liability coverage that includes the dealership’s license plates.
- Fee: $100 DMV application fee. This is separate from the annual Division of Revenue business license.
- Copy of a manufacturer letter or franchise agreement - Dealers operating under a franchise for new vehicles must attach a manufacturer letter or franchise agreement confirming the franchise and specifying the vehicle makes offered for sale.
- Proof of business name - filed with the Prothonotary’s Office serving the area of the dealership’s address.
Completed applications and all required documents must be sent to:
Dover Division of Motor Vehicles
303 Transportation Circle
P.O. Box 698
Dover, Delaware 19903
For additional details, see our Delaware Motor Vehicle Dealer License page.
Delaware Auto Dealer Bond Renewal
Delaware dealer licenses expire annually on December 31 and must be renewed before that date. The DMV charges a $50 license renewal fee, and the annual Division of Revenue dealer business license must also be kept current. To renew, a dealer must have sold at least 5 vehicles during the calendar year (§ 6304); the Director may waive the 5-vehicle minimum for good cause shown in writing.
The term of the surety bond is continuous or commensurate with the license period, with the bond’s expiration no earlier than midnight on the date the license expires. Premiums are typically billed annually, so plan to pay each year alongside the license renewal.
FAQs
How long does it take to get a Delaware auto dealer bond?
Most applicants receive the bond within one business day of submitting our short online form. Once you approve the quote and complete payment, the bond is typically issued within 24 hours and sent to you ready for filing with the Department of Finance.
Will applying for a Delaware auto dealer bond hurt my credit score?
It will not. Underwriters use a soft credit pull to review your credit profile, which is invisible to lenders and has zero impact on your score. You can shop around and compare bond rates without any concern about credit damage.
Can I get a Delaware auto dealer bond if I have bad credit?
Credit challenges don’t take you out of the running. Through our Bad Credit Surety Bond Program, we partner with sureties that specialize in higher-risk profiles and routinely place bonds for applicants in the 5%–10% rate range. Past tax issues, judgments, or a low score won’t automatically disqualify you.
How many yearly sales are required for a dealer to renew a license?
A dealer must sell at least five vehicles during the calendar year - from January 1 through December 31 - to qualify for license renewal. However, the Director of the Division of Motor Vehicles may allow renewal for a dealership with fewer than five sales if it provides a written explanation showing valid reasons for the shortfall.
Is there a cap on total payouts under a single bond?
Yes. The aggregate liability of the surety on the bond is capped at the bond's penal sum — in this case, $25,000 — regardless of how many claims are filed against it. If multiple consumers are injured by the same dealer, the Secretary of the Department of Finance in Delaware is authorized to publish a notice identifying all relevant claims so they can be considered together.
How much notice is required to cancel a Delaware auto dealer bond?
A surety cannot cancel an existing Delaware auto dealer bond unless it files a written notice of intent to cancel with the Secretary of the Department of Finance at least 30 days before the cancellation takes effect. This 30-day window gives the dealer time to secure replacement coverage before any lapse affects the license.
What kinds of losses does the Delaware car dealer bond cover?
The bond covers actual losses to consumers caused by a licensed dealer's wrongful act, omission, default, fraud, or misrepresentation while operating as a licensed retail seller — including reasonable attorney fees the consumer incurs in pursuing a claim. It does not cover claims by business creditors, third-party service providers, agents, or anyone employed by the dealer.
