Alabama Auto Dealer Bonds, and More

What you need to know about Alabama Auto Dealer Bonds, and More

Alabama Auto Dealer Bonds, and More

How much does an auto dealer bond cost in Alabama?

Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Alabama Department of Revenue’s Motor Vehicle Division as part of the licensing requirements for new and used motor vehicle dealers, designated agents, rebuilders, reconditioners, and wholesalers to conduct business in the state. The Motor Vehicle Division sets the total bond amount at $50,000.

The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Alabama 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 Alabama auto dealer bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.

Below are the lowest premiums EZ Surety has issued for auto dealer surety bonds in the State of Alabama.

  • EZ Surety has issued motor vehicle dealer bonds for premiums as low as $125.

Why are auto dealer bonds important in Alabama?

Alabama auto dealer bonds provide protection for customers, creditors, and the state government. When an Alabama motor vehicle dealer posts a surety bond, they provide a guarantee to the bond’s Obligee (the Alabama Motor Vehicle Division) that they will conduct business in compliance with the conditions listed in the Code of Alabama 1975.

If the auto dealer fails to comply with the code, 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 Alabama

To obtain your auto dealer license in Alabama, you must meet the Alabama Motor Vehicle Division licensing requirements by completing the following steps:

  • Complete and submit a dealer license application
  • Install the proper dealership signage
  • Post the $50,000 surety bond
  • Provide proof of liability insurance
  • Pay all license and application fees