Michigan Auto Dealer Bond
What is a Michigan auto dealer bond?
The Michigan Department of State Business Licensing Section requires auto dealers to be licensed and bonded. The Vehicle Code outlines the state’s requirements for auto dealers. Officially, this bond is called the Michigan Uniform Vehicle Dealer Surety Bond. The required amount is $25,000.
An auto dealer bond holds dealers and dealerships accountable to the law and industry regulations. It protects consumers from fraud, cheating, or misrepresentation on behalf of the dealer. If the dealer causes another party financial harm by breaking the law, the injured party can file a claim against the bond for compensation. This bond also ensures the dealer pays all required taxes on sales to the state.
Get Your Auto Dealer Bond:
What does a Michigan 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 this $25,000 bond for as low as $225. Apply today!
Why are these bonds required in Michigan?
The Michigan Uniform Vehicle Dealer Surety Bond exists to reimburse various parties that could lose money if the auto dealer commits fraud, misrepresentation, tax deficiency, or cheating. Parties that can file claims on the bond include customers, sellers, government agencies, and financing agencies. Claimants could be reimbursed up to $25,000 for their losses if their claim is valid.
Who needs a Michigan auto dealer bond?
You’ll need a surety bond for a Class A, B, or D dealer license. Purchase the $25,000 surety bond if your first renewal was after January 23, 2023, OR if your $10,000 surety bond was canceled or rescinded.
- Class A: New vehicle dealers
- Class B: Used vehicle dealers
- Class D: Brokers
How to Get Your Michigan Motor Vehicle Dealer License
In Michigan, to buy, sell, broker, lease, negotiate a lease, or deal in five or more vehicles listed below, you need to be licensed.
- Motor vehicles
- Trailer coaches
- Trailers that weigh over 2,500 pounds
You must also be licensed if you purchase, sell, exchange, broker, or deal in salvageable parts of at least five vehicles. Additionally, you’ll need a license if you buy five or more vehicles to process them into scrap metal or sell the parts.
Follow this general process to apply for your motor vehicle dealer license in Michigan.
Submit an application based on your license class (see the Licensing tab for details). You may need to include the following items in your application.
- Fingerprints (via IdentiGO)
- Zoning and municipal approval
- Copies of your Articles of Incorporation or your Assumed Name Filing for your business
- Established Place of Business
- Michigan No-Fault Fleet insurance (if your license allows for dealer plates)
- Original $25,000 surety bond (for Class A, B, and D dealers)(see form)
Frequently Asked Questions
How long does it take to get a motor vehicle dealer bond?
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.
Who regulates auto dealer bonds in Michigan?
The Michigan Department of State regulates licensing and bonding for the motor vehicle industry.
How do I renew my auto dealer bond?
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 expiration date will be listed on your bond form.
If you’re buying your bond 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.
What happens if someone files a claim on my bond?
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.
How can I avoid claims on my auto dealer bond?
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 Michigan 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.
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.