An auto dealer bond is a legal guarantee that protects both your customers and the state. It’s a mandatory requirement in most states if you want to obtain a license to sell vehicles.

This bond acts like a promise that you will:

• Sell good-quality vehicles or parts
• Handle the purchase process properly
• Follow all state laws for dealerships
• Pay all necessary sales taxes

The bond does not protect the dealer—it protects the public from dishonest or careless dealers.

Why Do You Need an Auto Dealer Bond?

Every state requires vehicle dealers to be licensed. Unfortunately, some dealers take advantage of customers even after getting a license. They might:

• Lie about a vehicle’s mileage or condition
• Change or fake a vehicle title
• Not transfer ownership correctly
• Steal customer deposits
• Avoid paying required sales taxes

To protect the public from these bad practices, states require all dealers to buy a surety bond before doing business.

How Much Does an Auto Dealer Bond Cost?

The price of the bond is called a premium, and it is set by a surety company—a type of insurance provider that offers bonds. For example, the premium for a Certificate of Title Bond may vary depending on the vehicle’s value and the applicant’s credit. Each company sets its price, so the cost can vary.

The bond price depends on several factors, such as:

• Your credit score
• Your experience in the business
• How many claims have been made against other dealers in your state

For example, in Ohio, the required $25,000 bond is available at a fixed price.

Working with a surety agency, like Surety Bonds Direct, can help you find the lowest price by comparing rates from different companies.

Tips to Save Money on Your Bond

Surety Bonds Direct works with many trusted surety companies to find the best deal for you. They’ll compare prices and let you know the lowest one—without any pressure to buy.

Saving money on your bond helps you pay for other startup costs like:

• Application and exam fees
• Business signs
• Insurance policies
• Dealer license plates
• Other dealership expenses

Many dealers save hundreds of dollars just by comparing prices before buying their bond.

Buying an Auto Dealer Bond Is Simple

Once you agree to the price, buying the bond is quick and easy. You just fill out an online form.

After your payment, the surety company will:

• Fill out the correct bond form
• Get your signature
• Add the official seal
• Include the power of attorney form

In some states, the original auto dealer bond has to be mailed to you because the licensing office needs the signed and sealed document with your application. In other states, a digital copy is enough. In that case, the bond can be emailed to you, and you can print it out and send it with your paperwork. It’s always best to check with your state to see which one they accept.