Overview of Massachusetts Motor Vehicle Dealer Bond Requirements

The state of Massachusetts requires applicants for a used car dealer license to obtain an auto dealer bond. Section 58 of Chapter 140 of the General Laws of Massachusetts mandates that so-called Class 2 license applicants need a $25,000 dealer bond.

There are 3 classes of dealers in Massachusetts: (1) New Dealers, (2) Used Dealers, and (3) Junk and Salvage. To obtain a license the following will be required: Proper zoning, Franchise agreements (class 1), Workers Comp Insurance, Auto Dealer Surety Bond, and Proof of location (agreement of sale, lease agreement).

According to Massachusetts law, licenses are issued by local licensing boards, instead of the state Registry of Motor Vehicles, and expire annually on January 1 following the date of issue.

The bond is required in order to guarantee that dealers will conduct business in accordance with the requirements of state law. If a dealer violates these requirements, a complaint can be brought against them, which may result in a claim against the bond being filed. Under the bond agreement, the surety which issues the bond may then extend compensation to claimants up to the full penal sum of the bond.

Do you have any questions about how surety bonds work? See our ‘What is a surety bond’ guide for more information!

Start your surety bond application today! Why us?
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In the sections below you can read about how much your bond will cost, what bonding options there are for people with bad credit, why claims are filed against bonds, and how to get your own bond.

Call us at 866.450.3412 if you have any questions about the bonding requirements for used car dealers in Massachusetts.

Cost of Your Bond

To get bonded you need to pay a rate to the surety which issues the bond. This rate, or cost, is a percentage of the full amount of your bond ($25,000).

When you apply for your bond, the surety will review your personal credit score, along with other personal financial information, to determine the rate at which you can get bonded. Credit score is the most important of these factors, and the higher your score, the cheaper it is to get bonded.

Applicants who have scores of 700 FICO or above typically get the lowest rates. Rates for such applicants vary between 1,5% and 3% of the total bond amount. So for example, if you get a 2% rate on your bond, you will need to pay $500 to get bonded.

To find out how much exactly your bond will cost, fill in the bond application form and we will provide you with a free and exact quote!

Getting Bonded With Bad Credit

Massachusetts MVD’s with a low credit scores, or public records on their personal credit report (Bankruptcy, Liens, Collection, or Civil Judgments) may find a difficult time getting bonded. Bryant Surety Bonds, Inc offers a Bad Credit Surety Bond Program that is specially tailored to your needs and can get you approved.

The only difference to applicants with higher scores is that rates under this program are slightly higher. This is because sureties assume a greater risk when bonding applicants with lower scores.

The exact cost of your bond is determined when you apply. Visit the program page for more information about these bonds, and to request a free quote.

Claims Against Your Bond

Section 58 specifies the reasons for a which a claim may be filed against a dealer’s bond. This includes:

  • Defaulting or not paying bank drafts
  • Failure to deliver a valid vehicle title certificate free of interests and liens
  • Selling a stolen vehicle
  • Not disclosing the actual mileage of a vehicle being sold
  • Dishonest, deceptive, unfair business practices
  • Not paying off a lien on a vehicle when having assumed the obligation to do so

In any of the above cases, a complaint may be filed against a dealer which may result in a claim against their bond. If a claim is filed, the surety which backs the bond investigates the issue and may then pay out compensation to claimants up to the full amount of the dealer’s bond. The dealer is then obligated, as per bond agreement, to repay the surety in full.

Since bond claims can be costly and difficult to handle, the best strategy for avoiding them is to comply with all state and local legal requirements, and conduct business honestly! If you are still concerned about a possible claim against your bond, contact your surety to receive advice on handling the situation.

Get Your Massachusetts Motor Vehicle Dealer Bond Today!

Complete the surety bond application form to request a free quote on your bond. We will then provide you with additional information about completing your application.

Once your application is processed, it takes about two working days for your bond to be ready. We’ll send you the bond by standard mail as soon as it is issued, as well as forward a digital copy to you via email.

Not ready to apply? Start by getting a FREE a bond quote!

If you have any additional questions, call us at 866.450.3412 anytime!


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.