Colorado Auto Dealer Bond

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What is a Colorado auto dealer bond?

The Colorado Department of Revenue Auto Industry Division requires auto dealers in the state to be licensed and bonded. A Colorado auto dealer bond holds dealers and dealerships accountable to the law and industry regulations outlined in Title 44, Article 20 of the Colorado Revised Statutes

  • Motor vehicle dealers in Colorado must post a $50,000 surety bond. The only exception is dealers only selling small utility trailer dealers weighing less than 2,000 pounds, in which case the bond requirement is $5,000. 
  • Motor vehicle dealer salespeople (employed by a dealership) must post a $15,000 bond.

Get Your Auto Dealer Bond:

How much does a Colorado 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 $50,000 Colorado motor vehicle dealer bonds for as low as $450.

Why are these bonds required?

By purchasing these bonds, you agree to operate your business according to the Colorado Revised Statutes. If you fail, causing a customer financial harm by committing fraud or misrepresentation, the customer can file a claim against your bond for compensation. Ultimately, you could be liable for paying up to $50,000 (or whatever your bond limit is).

Who needs a Colorado auto dealer bond?

If you wish to obtain any of the following licenses, you will need a $50,000 surety bond (except for salespeople who must post a $15,000):

  • Motor vehicle dealer’s license
  • Used motor vehicle dealer’s license
  • Motor vehicle salesperson’s license
  • Wholesaler’s license
  • Wholesale motor vehicle auction dealer’s license
  • Business disposal dealer’s license
  • Powersports vehicle dealer’s license
  • Used powersports vehicle dealer’s license

How to Get Your Colorado Auto Dealer License

Follow this process to apply for your Colorado motor vehicle dealer license online:

  • Meet the prerequisites. You must have a net worth of $100,000 or more and a credit score of 701 or higher.
  • Pass a background check and verification of fingerprints.
  • Complete a license application.
  • Complete an addendum for every owner, partner, officer, or member.
  • Obtain a Pre-Licensing Education Program Certificate.
  • Pass the Mastery Exam.
  • Get a surety bond ($5,000 for small trailer dealers weighing less than 2,000 pounds, $50,000 for all other dealers).
  • Provide a financial statement for the applicant and all owners.
  • If you’re filing as an LLC, you must provide a Certificate of Good Standing, Constituent Filed Document, Bylaws of the Corporation, and Trade Name.
  • Submit a business plan.
  • Submit a copy of your lease (if applicable).
  • Complete a Place of Business Affidavit form.
  • Complete the franchise agreement (if applicable).
  • Fill out a Dealer Plate Affidavit form.
  • Complete a Colorado Sales Tax Withholding Account Application.
  • Pay fees.

Frequently Asked Questions

Since this bond requires underwriting, we can’t issue it to you instantly. However, the ZipBonds team always strives to deliver your bond to you within 24 hours of application.

The Colorado Motor Vehicle Dealer Board regulates licensing for dealers and wholesalers. You can contact the Board with any licensing questions by emailing dor_dealers@state.co.us or calling (303) 205-5604.

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 Colorado 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.

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About ZipBonds.com

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.