Every car dealership and all other businesses that deal in motor vehicles need a license. As a condition for that license, a Washington auto dealer needs to keep a surety bond every year. This dealer surety bond can be about $30,000 for dealerships selling vehicles and $5,000 for watercraft dealers, depending on the size of the business and the credit of the business owner or the principals. With the license and auto dealer bond, consumers are sure that they will get compensation for any damages that may come when the Washington motor vehicle dealer fails to follow any laws set by the Washington Department of Licensing (DOL). Here is all you need to know about the car dealer bond.

What Is a Washington Auto Dealer Bond?

According to the Washington Department of Licensing, car dealers and other vehicle businesses need to maintain an auto dealer surety bond to meet the requirements of Chapter 46.70 of Revised Code of Washington. The Washington motor vehicle dealer bond amount should be as required by the auto dealer license and issued on the bond form that Washington State provides (DLR-430-205).

The license and bond ensure that the dealerships remit tier taxes and fees as required. If the dealer conducts business in an unethical manner that causes the consumer some loss, the surety covers the losses of the consumer. As such, the principal has to pay the surety for paid-out damages. The bond is continuous until the principal cancels it. It is required for businesses that deal vehicles and vessels, vehicle manufacturers, tow truck operators, and wreckers, among others. To cancel the bond, the principal needs to write to the DOL. Your bond will be canceled 30 days after the DOL receives the notice. All businesses covered by the bond should indicate the type of license their business needs on their surety bond form.

How Much Does a Washington Auto Dealer Bond Cost?

You will need an auto dealer bond when applying for your auto dealer license. The bond works like any other surety bond. There is an agreement between the dealership (the principal), the surety (the company underwriting the bond), and the State of Washington Department of Licensing (the one who will oblige).

The Washington auto dealer bond amount is $30,000 for motor vehicle dealers and wholesalers and $5,000 for other vehicle dealers, such as motorcycle dealers, travel trailers, tent trailers, and fifth-wheel trailers, among others.

The surety bond is different from business insurance in that it does not protect your business. Instead, it is there as a pledge to clients that you will safeguard their interests and rights. If your business operates against the applicable laws and it causes the client damages, the client has the right to make a claim on your bond.

The motor vehicle dealer surety bond amount is high, but you will only need to pay a small percentage of the total bond amount as a bond premium. Here is a breakdown of what you need to pay:

If you have a good credit score of above 650, you will pay between 1% and 3% of the total bond amount. This is between $300 and $900 for the premiums. Once you submit your bond application and pay the application fee, the auto dealer bond cost is as follows:

Auto Dealer Bond Cost Based On Credit Score
Surety Bond Name Surety Bond Amount Above 700 Between
Motor Vehicle Dealer Bond /
Wholesaler Dealer Bond /
Manufactured Home Dealer Bond /
Travel Trailer Dealer Bond
$30,000 $300-$600 $450-$900 $600-$1,200 $900-$2,100
Miscellaneous Vehicle Dealer Bond $5,000 $100 $100-$150 $100-$200 $150-$350

* The table provides a bond cost ballpark estimate based on the applicant's credit score. Actual bond prices can differ due to a number of factors. For an exact quote, please complete our online application. It's fast and 100% free!.

To determine the exact percentage of the bond you need to pay, your surety company looks at your credit score, finances, and the health of your business. The bond company assesses the level of risk of your business. High-risk businesses will pay more than low-risk businesses. The factors considered when calculating the percentage you pay include:

  • Personal credit score
  • Business assets and liability
  • Business financials
  • Your experience in auto dealership

You also need to shop around for the most affordable bond option. Get a bond quote from several bond companies and compare rates. Please complete our online application and let us help you shop around for the best bond option.

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How Can I Get a Washington Auto Dealer Bond?

After you apply for the auto dealer license, it stays valid for a year, and then you have to renew it before the expiration date. The first step is to pick the license type. There are several license types to apply for, including:

  • Motor Vehicle Dealer for businesses selling new and used vehicles
  • Vehicle sub-agency for each brand a dealer operates
  • Manufacturer home dealer for dealers selling mobile homes
  • Manufactured home dealer sub-agency for each branch a travel trailer dealer operates
  • Off-road vehicle dealership for off-road vehicles except snowmobiles
  • Miscellaneous vehicle dealer for sellers of electric vehicles and motorcycles, among others
  • Miscellaneous vehicle dealer sub-agency for every branch the miscellaneous vehicle dealer operates
  • Snowmobile dealer for dealers of snowmobiles
  • Vessel dealer for dealers selling any type of boat, which is 16 feet or longer

The next step is to pick a business location. You need a permanent place of business that meets the following requirements:

  • Have an enclosed premise that you use for commercial purposes only
  • Meet all local zoning rules
  • Have a sign showing the name and type of business
  • Have an operational phone number
  • Be open for business a minimum of five days a week between 10 a.m. and 4 p.m.
  • Store all records and documents of business transactions

Once you meet the bond requirements above, follow the steps below to complete the process:

  1. Purchase the surety bond as per the surety bond cost guide above.
  2. Complete the car dealers training.
  3. Obtain and submit a personal criminal history statement with your license application.
  4. Prepare and submit your financial statement.
  5. Complete your application and send it to Business Licensing Service in Olympia, WA.
  6. Pay the license fee.
  7. Wait for the site inspection before licensing.

Washington Auto Dealer License and Renewal

Obtaining your Washington auto dealer license entails going through a number of legal steps, including getting a Washington auto dealer bond. To give you a kick start in the licensing process, here is an overview of the requirements that you need to meet to start your dealership in the state.

The licensing authority is the Washington State Department of Licensing. The full list of documents and steps are available in the Motor Vehicle and Other Dealer License Requirements document

Together with your Washington business license application, you need to furnish the following:

  • Vehicle Dealer/Manufacturer Addendum
  • Vehicle Dealer E-Permit Online Access Application
  • Financial/Source of Funds Statement for sole proprietors, partners, or business entities
  • A separate Personal Criminal History Statement for each member of the business
  • Fingerprint card for each member of the business
  • Certificate of Dealer Education in case you sell only used vehicles
  • Meet the Established place of business requirements (available in the Dealer Checklist)
  • Proof of payment of the applicable license fees
  • $5,000 or $30,000 Washington motor vehicle dealer bond (Vehicle/Vessel Dealer, Vehicle Manufacturer, Registered Tow Truck Operator, or Wrecker Business Bond)

Once you’ve submitted your complete application, the Washington State Department of Licensing will review your case. If you meet all requirements, you’ll be issued your Washington auto dealer license.

You’ll have to renew your license every year, as well as your Washington auto dealer bond. Since your surety bond cost can change over time, it’s worth improving your financials, so that you pay less to get bonded.

Can I Get a Washington Auto Dealer Bond With Bad Credit?

You can get an auto dealer bond even with bad credit. With a low credit score, expect to be offered a higher rate. The cost of the license bond premium increases by up to 7% when you have bad credit as the bond company tries to mitigate the risk that comes with the bad credit.

If you have a poor credit score, you can benefit from the Bad Credit Program. The program benefits those with low credit scores, tax liens, and civil judgments that make it challenging for them to apply for a surety bond.

Who Should Get a Washington Auto Dealer Bond?

A dealer bond should be obtained by several businesses, including:

  • Motor vehicle wreckers who buy $1,000 surety bond
  • Registered tow truck businesses have to post $5,000 as a surety bond
  • Vessel dealers selling at least 15 vessels a year post $5,000 as a surety bond
  • Mobile home manufacturers buy $20,000 surety bond a year
  • Motor vehicle dealers buy $30,000 surety bond every year

There may be a specific bond requirement to meet when applying for each type of dealer license above. There are also blanket requirements, such as posting the bond. You can see more details on the Washington Department of Motor Vehicles (DMV) website. If you meet all the licensing requirements to satisfy the motor vehicle dealer board, you will have your motor vehicle dealer license without any challenges.

You can get the best pricing and get a free quote from different Washington motor vehicle dealer bond companies when you apply through us.

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.