Iowa Auto Dealer Bonds, and More

Learn more about Iowa Auto Dealer Bonds, and More

How much does an auto dealer bond cost in Iowa?

Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Iowa Department of Transportation as part of the licensing requirements for dealerships to conduct business in the state. The Department of Transportation sets the total bond amount at $75,000.

The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Iowa auto dealer bonds typically cost between 1% and 3% of the total bond amount.

During the application process, the surety company evaluates your personal credit, financial statements, industry experience, and licensing history. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing an Iowa auto dealer bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.

Why are auto dealer bonds important in Iowa?

Iowa auto dealer bonds provide protection for customers, creditors, and the state government. When a South Carolina motor vehicle dealer posts a surety bond, they provide a guarantee to the bond's Obligee (the Department of Transportation) that they will conduct business in compliance with the conditions listed in the Code of Iowa, Chapters 321 and 322.

If the auto dealer fails to comply with the conditions, the surety company will pay out financial losses to damaged parties up to the full bond amount. The auto dealer is liable to reimburse the surety for any damages paid under the bond.

How to get your auto dealer license in Iowa

To obtain your auto dealer license in Iowa, you must meet the Iowa Department of Transportation licensing requirements by completing the following steps:

  • Complete the application for dealer licensing
  • Pass an on-site inspection
  • Provide a copy of your sales tax license
  • Provide proof of garage liability insurance
  • Post the $75,000 surety bond
  • Provide a credit report and background check for each owner


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