Tennessee Auto Dealer Bond
What is a Tennessee auto dealer bond?
The Motor Vehicle Commission requires you to purchase a $50,000 (minimum) Corporate Surety Bond to get your auto dealer state license in Tennessee. You must keep it active for two consecutive years, starting when you receive your license.
A Tennessee 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 in Tennessee:
What does a Tennessee 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, you might 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 Tennessee auto dealer bonds for as low as $275 for a two-year term. Apply today!
Who needs auto dealer bonds in Tennessee?
Anyone who sells more than five motor vehicles (new or used) in a 12-month period must be bonded. This includes RV dealers, manufacturers, auctions, and wholesalers.
Why is this bond required?
Tennessee Code requires anyone applying for a state auto dealer license to post a $50,000 surety bond. The bond ensures dealerships faithfully perform their obligations, according to state laws, while engaging in motor vehicle transactions. It also guarantees payment of taxes, license fees, and penalties.
How to Get Your Tennessee Auto Dealer License
Follow this general process to apply for your auto dealer license in Tennessee successfully:
- Establish a permanent place of business.
- Apply for and submit your surety bond.
- Provide written approval from your local zoning/land-use authority.
- Compile a financial statement for your business that indicates a net worth of at least $10,000.
- Ensure your business tax license, issued by the County Clerk, is current.
- Get liability insurance.
- Provide a copy of your current Sales & Use Tax Certificate.
- Make sure your signage meets the minimum requirements – provide photos as proof.
- Fulfill the criteria for franchise dealers (if applicable).
- Submit salesperson applications.
- Complete the floor plan form.
- Pay dealer licensing fees.
See the Minimum Requirements for Tennessee Motor Vehicle Dealer License page for more details. You’ll find the necessary forms on the Motor Vehicle Commission website.
Frequently Asked Questions
How long does it take to get a Tennessee auto 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 Tennessee?
The TN Department of Commerce & Insurance Motor Vehicle Commission regulates the industry.
How do I renew my surety bond?
Once you’ve purchased your motor vehicle dealer bond, remember to renew it every two years before its expiration date. 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.
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 Tennessee Auto Dealer Bond
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply online or call us at (888) 435-4191 to get bonded in a flash!
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.