Kentucky Auto Dealer Bond

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What is a Kentucky auto dealer bond?

The Kentucky Motor Vehicle Commission, according to the Kentucky Revised Statutes, requires auto dealers in the state to be licensed. Some auto dealers must also be bonded (see section “Who needs an auto dealer bond in Kentucky?” for details).

The bond requirement may apply to:

  • New vehicle dealers
  • Used vehicle dealers
  • Motorcycle dealers
  • Automotive mobility dealers
  • Motor vehicle leasing dealers

An 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.

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How much does a Kentucky 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.

The cost of your Kentucky auto dealer bond will depend on the amount required, which can vary from $25,000 to $100,000. The price for these bonds starts at $250. 

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Who needs an auto dealer bond in Kentucky?

Specific auto dealers in Kentucky must furnish a surety bond – if they are unable to “demonstrate a minimum of $100,000 of liquid assets and/or $50,000 unencumbered cash in the business as well as unencumbered inventory in the owner’s or business’s name” (Dealer Requirements 2023). 

If this includes you, you must purchase a bond in the difference of shortfall on the inventory or cash meeting the $100,000 minimum.

Why are these bonds required in Kentucky?

The Kentucky Statutes Chapter 190.030 requires various auto dealers to post bonds and abide by their terms while operating their businesses. If they break the law, they could face costly bond claims up to the total bond amount ($25,000-$100,000).

How to Get Your Kentucky Dealer License

Before applying for your dealer license, you’ll likely need to obtain the following items.

  • Established Place of Business
  • Insurance
  • Business name 
  • Licensed sales personnel
  • Business sign 
  • Separation of facilities
  • Application 

Your application must be complete, or it will be returned to you. Submit a $175 application fee plus a $25 fee for every person listed as owner (for background checks). Make your check payable to the Kentucky State Treasurer. The Commission lists varying requirements for different types of dealers, including:

  • Wholesale dealers
  • New dealers
  • Motorcycle and leasing applicants
  • Auction dealers 
  • Restricted dealers and mobility applicants
  • Restricted/automotive recycling applicants

See the MVC website and Dealer Application section for documents detailing the application process.

Frequently Asked Questions

Unlike most states, your surety provider must physically ship your Illinois auto dealer bond. With ZipBonds, we strive to prepare your bond within 24 hours of application so you can receive it in the mail as promptly as possible.

The Kentucky Motor Vehicle Commission regulates licensing and bonding for the motor vehicle industry in Kentucky. If you’re a new dealer and have questions about the application process or general questions concerning your bond or license, call the Commission at 502-573-1000.

You must renew your bond each year by a specific date for it to remain active (and for you to maintain your business license). Your bond expiration date will be listed on your bond form.

If you’re buying from Zip, 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 Kentucky 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 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.