Credit history helps sureties determine an applicant’s likelihood to trigger a bond claim. Some bonding companies may approve you for an auto dealer bond if you have a poor credit score, while others may not. If you’re approved, the cost of your bond may be higher than if you had excellent credit.

A state’s Department of Motor Vehicles (DMV) usually regulates auto dealer licensing and bonding.

To successfully apply for and obtain a motor vehicle dealer surety bond, follow these five steps.

1. Learn the requirements for your state.

Each state may have distinct regulations and criteria for auto dealer bonds, so familiarize yourself with the necessary steps and documentation for compliance.

2. Find the specific bond you need for your business.

Different states may have various bond types, such as motor vehicle or used car dealer bonds. Select the correct bond type that aligns with your specific dealership activities.

3. Apply for your bond.

This typically involves submitting an application to a surety bond provider (like ZipBonds). The application process may require you to provide information about your business, financial history, and other relevant details. Upon approval, you’ll receive your bond.

4. Pay for, print, and sign your bond.

After approval, fulfill the payment requirements associated with the bond. Once you’ve submitted payment, you’ll receive the bond document. Print a physical copy of the bond and ensure it’s signed as required. This signed document signifies your commitment to adhering to the terms and conditions outlined in the bond agreement.

5. Keep a copy for your records, and send a copy to your state with other necessary paperwork.

Retain a copy of the signed bond for your records. Simultaneously, submit a copy of the bond to the relevant state authorities and any other necessary paperwork. This step is essential for completing the licensing process and demonstrating compliance with state regulations.

Here’s the general process for applying for an auto dealer license. Be sure to check your specific requirements, as they vary from state to state.

• Research state requirements: Familiarize yourself with the specific licensing requirements set by your state DMV or other licensing agency.
• Attend required training (if applicable): Check if your state mandates attendance at a dealer license seminar or training and fulfill this requirement.
• Establish a business entity: Establish a legal business structure for your dealership, adhering to state regulations.
• Secure a business location: Obtain a physical business location that meets zoning requirements and has space for an office and vehicle display.
• Obtain a sales tax number: Get a sales tax number from your state’s revenue or taxation department for collecting and remitting sales taxes.
• Purchase insurance: Obtain required insurance coverage, including liability insurance, and provide proof as part of your license application.
• Secure an auto dealer bond: Obtain a bond as a financial guarantee for ethical operation and compliance with regulations.
• Complete the license application: Fill out the auto dealer license application, including all necessary documentation.
• Undergo background checks: Be prepared for background checks for yourself and key personnel involved in the dealership.
• Pay fees and submit application: Pay the required fees and submit your application online or in person to the state licensing agency.
• Await approval: Allow time for the state to process your application and conduct necessary reviews, background checks, and inspections.
• Receive your auto dealer license: Upon approval, the state will issue your auto dealer license. Display it prominently at your dealership and maintain ongoing compliance with state regulations.