How much does an auto dealer bond cost in Minnesota?
Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Minnesota Department of Public Safety as part of the licensing requirements for dealerships to conduct business in the state. The Department of Public Safety sets the total bond amount based on the type of dealership:
- $50,000 bonds for new and used car dealers
- $5,000 bonds for snowmobile, small horse trailer, motorized bicycle, and moped 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 Minnesota 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 Minnesota 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 Minnesota?
Minnesota auto dealer bonds provide protection for customers, creditors, and the state government. When a Minnesota motor vehicle dealer posts a surety bond, they provide a guarantee to the bond’s Obligee (the Department of Public Safety) that they will conduct business in compliance with the conditions listed in Minnesota Statutes, section 168.27.
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 Minnesota
To obtain your auto dealer license in Minnesota, you must meet the Minnesota Department of Public Safety licensing requirements by completing the following steps:
- Complete the dealer license application
- Post the appropriate surety bond
- Provide proof of liability insurance
- Have a commercial building with a display area for a minimum of 5 vehicles
- Install the required signage at the established place of business
- Meet the zoning requirements
- Pay all application and licensing fees