Washington Motor Vehicle Dealer And Other Bonds

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Learn more about Washington Motor Vehicle Dealer And Other Bonds

How much does an auto dealer bond cost in Washington?

Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Washington State Department of Licensing (DOL) as part of the licensing requirements for dealerships to conduct business in the state. The DOL sets the total bond amount based on the type of dealership:

  • $40,000 vehicle manufacturer bonds for businesses that manufacture mobile homes
  • $30,000 bonds for retail and wholesale businesses or auctioneers that sell new or used cars, trucks, or motor homes
  • $20,000 bonds for businesses that manufacture travel trailers
  • $5,000 bonds for vessel dealers that sell at least 15 watercraft per year 
  • $5,000 bonds for tow truck operators
  • $1,000 bonds for vehicle wreckers

The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Washington 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 a Washington 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 Washington?

Washington auto dealer bonds provide protection for customers, creditors, and the state government. When a Washington motor vehicle dealer posts a surety bond, they provide a guarantee to the bond’s Obligee (the DOL) that they will conduct business in compliance with the conditions listed in Chapter 46.70 of the Revised Code of Washington.

If the auto dealer fails to comply with the statutes, 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 Washington

To obtain your auto dealer license in Washington, you must meet the Washington DOL licensing requirements by completing the following steps:

  • Complete the application for a vehicle dealer license
  • Post the appropriate surety bond
  • Submit a copy of a criminal background check
  • Provide a copy of your property tax statement or rental agreement
  • Provide a certificate of dealer education (used car dealers only)
  • Pay all application and licensing fees