Iowa Auto Dealer Surety Bond

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What is an auto dealer surety bond in Iowa?

If you wish to become an auto dealer in Iowa, you must first become licensed. One of the requirements for obtaining your license is getting a surety bond. The bond must be worth $75,000. In Iowa, the official title is Motor Vehicle Dealer and/or Towable Recreational Vehicle Dealer Bond.

The Iowa Department of Transportation (DOT) requires this bond to hold dealers accountable to the law and industry regulations.

Get Your Auto Dealer Bond:

How much do Iowa auto dealer surety bonds 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 these $75,000 bonds for as little as $375 per year.

Who needs an auto dealer bond in Iowa?

If you engage in any of the following activities to engage in selling motor vehicles to the public, you’ll need a vehicle dealer’s license and bond.

  • Selling
  • Acquiring
  • Holding
  • Exchanging
  • Displaying
  • Brokering
  • Conducting a retail auction
  • Accepting on consignment
  • Acting as an agent to perform any of the above acts

If you sell more than six vehicles in 12 months, you’re considered “engaged in the business” and need a dealer’s license and surety bond.

Why are auto dealer bonds required in Iowa?

This bond is required in Iowa to protect motor vehicle buyers from damages they could suffer if their dealer breaks the law or treats them unfairly or unethically.

How to Get an Auto Dealer License with the Iowa DOT

To apply for your license with the Iowa DOT, follow this general process:

  • Fulfill the minimum requirements (e.g., establishing an office, having a repair facility, and having a display facility).
  • Complete the application.
  • Obtain a bond.
  • Pay the required fees.
  • Submit a zoning letter.
  • Schedule an onsite inspection.
  • Complete a pre-licensing course (for used motor vehicle dealers only).

See the Iowa DOT website for complete and detailed information and all the forms you need to apply successfully.

Frequently Asked Questions

An auto dealer surety bond is a three-party agreement between an obligee, a principal, and a surety.

  • Obligee: Iowa Department of Transportation
  • Principal: Motor vehicle dealer
  • Surety: Financial institution that issues and backs the bond

If your auto dealership engages in fraudulent activities or breaks state laws, the party that loses money can file a claim against you. If the claim is valid, your surety will cover the costs to settle the claim upfront. You must later repay your surety in full (up to the bond amount of $75,000).

Once you’ve purchased your motor vehicle dealer bond from a surety provider like ZipBonds, remember to renew it before its expiration date each year. We’ll send out a reminder each year when the expiration date is approaching. That way, you’ll have plenty of time to renew your bond and maintain your business license.

You’ll need a license and a $75,000 bond to sell towable RVs in Iowa. You’ll find the license application, bond form, fee information, and more on the Iowa DOT website.

The Iowa DOT regulates the auto dealership industry in the state, including the licensing and bonding processes.

The bond amount required is $75,000. This is a one-year bond and must be renewed annually before its expiration date, which will be listed on your bond form.

You may still be able to get bonded by paying a higher premium. Expect to pay upwards of 5-10% of the bond amount if you have a low credit score.

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 (outlined in the Iowa Code Chapters 321 and 322). If a client complains about something, address the issue immediately to avoid complaints from turning into costly claims.

Other Helpful Resources

How to Get Your Auto Dealer Bond in Iowa

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 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.