What is an Arizona Motor Vehicle Dealer Bond?
The Arizona Department of Transportation (ADOT) requires motor vehicle dealers to obtain a surety bond to qualify for their dealer license to operate in the state. The Arizona Auto Dealer Bond (also called a motor vehicle dealer bond or a car dealer bond) ensures that the licensed dealer will comply with Arizona state law. Should the principal violate state law or licensing regulations, the bond provides a method for the public to recover damages.
A surety bond is a contract between three parties: the surety company, the principal, and the obligee. The surety is the company that issues the bond, the obligee is the entity that requires the bond, and the principal is the person or business that must get the bond.
If the principal commits a fraudulent act or violates the regulations of their license, and an individual suffers losses, the injured individual can file a claim against the principal’s bond. The surety determines if the claim is valid, and if it is, the surety will compensate the injured party up to the bond amount. Unlike typical insurance, the principal must reimburse the surety for all claims paid, plus additional fees and expenses.
Who has to get this bond?
In general, most Arizona motor vehicle dealers are required to obtain a dealer license to operate legally within the state. One of the licensing requirements is to get a surety bond. The Arizona DOT has several different dealer license types, and the bond amount you must have will depend on which license you need. Below are the different license types:
- New Motor Vehicle Dealer
- Used Motor Vehicle Dealer
- Wholesale Motor Vehicle Dealer
- Public Consignment Auction Dealer
- Wholesale Motor Vehicle Auction Dealer
- Manufacturer of Trailers
- Automotive Recycler
Your license type will determine your required bond amount. New and used motor vehicle dealers and public consignment auction dealers will need a bond amount of $100,000. Motor vehicle brokers, wholesaler auto auction dealers, and wholesaler motor vehicle dealers must have a bond amount of $25,000. And automotive recyclers will need a bond amount of only $20,000 (apply for your automotive recycler bond here).
How much does an Arizona Auto Dealer Bond cost?
The price of your Arizona Motor Vehicle Surety Bond will vary due to several factors, including your dealer license type, industry experience, and credit, checked using a soft credit check (which will not harm your score).
With that said, surety bonds are priced as a percentage of the bond amount, called the premium rate. Applicants with optimal financials may see quotes starting as low as 1-2% of the bond amount. However, we still encourage you to apply if you have nonstandard credit.
At EZ Surety Bonds, we work with various surety companies to find the best rates available to you. Applying for a bond won’t harm your credit, so apply for your free quote anyway.
The obligee for the Arizona Auto Dealer Bond is the Arizona Department of Transportation. Their contact information is as follows:
Arizona Department of Transportation
1655 W. Jackson Street, MD 111F
Phoenix, AZ 85007
Phone – Motor Vehicle Division: 602-255-0072
How to get your Arizona Motor Vehicle Dealer Bond
Getting bonded does not have to be complicated. To get started, fill out the short application for your bond on our website, and one of our surety experts will reach out to you regarding your free quote within 24 hours.
If you have any further questions, contact our surety experts via email at firstname.lastname@example.org or by calling 1-866-546-4605.
Frequently asked questions
In short, if you want to obtain your Arizona Motor Vehicle Dealer License, you need to complete the following:
● Determine your license type
● Identify your business location
● Register your business
● Submit to a background check
● Get an Arizona Auto Dealer Bond
● Submit your license application with all the required documents
● Pay any required fees
Check out our “How to Get an Arizona Dealer License” guide for a more in-depth explanation.
The bond amount for the Arizona Auto Dealer Surety Bond varies based on your license type. Typically new or used motor vehicle dealers will have a required bond amount of $100,000. Fortunately, that will not be the cost of your bond. Your bond cost, or premium, is based on several factors, including your industry experience, business financials, and credit (using a soft credit check).
Applicants with strong financials may see quotes starting as low as 1-2% of the bond amount. If you have nonstandard credit, still apply! We work with multiple sureties to find the best quotes available to you.
After you purchase your bond, we mail the original bond document to you. Most obligees require you to file the original bond; however, some may approve of an electronic version. Because every obligee has different bond filing requirements, always check your obligee’s filing requirements before doing anything with your bond.