How much does an auto dealer bond cost in Colorado?
Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Colorado Motor Vehicle Dealer Board as part of the licensing requirements for car dealerships to conduct business in the state. The Motor Vehicle Dealer Board sets the total bond amount at $50,000 for new and used motor vehicle dealers, powersports vehicle dealers, vehicle wholesalers, and motor vehicle auction dealers.
The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Colorado 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 Colorado 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 Colorado?
Colorado auto dealer bonds provide protection for customers, creditors, and the state government. When a Colorado motor vehicle dealer posts a surety bond, they provide a guarantee to the bond’s Obligee (the Motor Vehicle Dealer Board) that they will conduct business in compliance with the conditions listed in the Colorado Revised Statutes.
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 Colorado
To obtain your auto dealer license in Colorado, you must meet the Colorado Motor Vehicle Dealer Board licensing requirements by completing the following steps:
- Complete the application for dealer licensing
- Post the $50,000 surety bond
- Complete a pre-licensing education and training class approved by the Colorado Motor Vehicle Dealer Board
- Provide an addendum form for each owner and officer
- Complete the auto industry division background investigation
- Complete fingerprint verification
- Pay all application and licensing fees