What is an Alabama auto dealer bond?
The Alabama Department of Revenue (ALDOR) Motor Vehicle Division requires new and used motor vehicle dealers, including trailer and motorcycle dealers, to be licensed and bonded. The bond requirement for all licensees is $50,000.
An Alabama auto dealer bond holds dealers and dealerships accountable to the law and industry regulations. If a dealer causes a customer financial harm by breaking the law, the customer can file a claim against the bond for compensation.
Get Your Auto Dealer Bond:
How much does an Alabama auto dealer bond cost?
Auto dealer bond premiums can vary based on applicants’ credit scores: the higher your credit score, the lower your annual premium. If you have excellent credit, expect to pay as little as 1% or less of the total bond amount. Other factors that may impact the cost of your bond include your industry experience and business and personal financials.
ZipBonds can offer Alabama motor vehicle dealer bonds for as low as $500 per year. Apply today!
Why is an auto dealer bond required in Alabama?
Alabama motor vehicle surety bonds hold dealers accountable to industry regulations. If they break the law and cause harm to anyone, the injured party can file a claim on the bond to recover their losses. In short, the dealer could be liable for claims up to $50,000.
Who needs this bond?
The following types of licensees must obtain a license and post a motor vehicle dealer bond:
- New auto dealers
- Used auto dealers
- Motor vehicle wholesalers
- Motor vehicle rebuilders
- Motorcycle dealers
- Trailer dealers
How to Get Your Alabama Dealer License and Plates
Follow this general process to apply for your motor vehicle dealer license online:
- Provide proof of insurance.
- Apply electronically via the Alabama Partner Registration Portal.
- Pay a fee.
- Obtain your $50,000 surety bond and submit it to the ALDOR.
- Get liability insurance coverage.
- Purchase the appropriate privilege license(s).
- Pay the required fees.
See the ALDOR website for detailed instructions.
Frequently Asked Questions
The Alabama Department of Revenue regulates the industry (licensing and bonding).
Contact your surety provider to update your bond documents (such as your license type, address, or dealership name).
Once you’ve purchased your motor vehicle dealer bond, remember to renew it before its expiration date each year. If you’re buying your bond from us, we’ll send a reminder when the expiration date is approaching. That way, you’ll have plenty of time to renew your bond and maintain your business license.
A customer can file a claim if a dealer commits fraud or unethical or unlawful business activity. If the claim is valid, the surety may cover the customer’s losses up to the total amount of the bond. The dealer will then need to pay back the surety for the damages.
Claims can be costly and damage your reputation and ability to get licensed and bonded again, so it’s best to do everything you can to avoid them.
Avoid illegal activities and fraudulent business practices to prevent claims on your bond. Pay all taxes you owe. Also, ensure you comply with your licensing regulations. If a customer complains about something, address the issue immediately to avoid complaints from turning into costly claims.
How to Get Your Alabama Auto Dealer Bond
ZipBonds offers the fastest and most secure option for getting auto dealer bonds. Our all-digital platform is intuitive and straightforward. Apply online or call us at (888) 435-4191 to speak with an agent directly. Many of our bonds can be processed and issued immediately online.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.