Auto Dealer Bond Requirements by State (2026 Guide)

What an Auto Dealer Bond Does

If you sell cars for a living, your state requires you to post a surety bond before it issues your dealer license. That bond is not insurance for you. It is protection for the people buying cars from you.

If you sell a vehicle with a rolled-back odometer, refuse to deliver a title, misrepresent a car’s condition, or skip out on sales tax — the buyer (or the state) can file a claim against your bond. The surety pays the claim up to the bond amount. Then the surety comes to you for reimbursement.

No bond, no license. No license, no legal way to sell cars.

How the Amounts Got So Big

Auto dealer bonds used to be small. Ten, fifteen, maybe twenty thousand dollars. That is not the world we live in anymore.

Over the last decade, states have sharply raised their dealer bond amounts. The driver is almost always the same: consumer complaints piled up, the state’s recovery fund ran short, legislators raised the bond to close the gap.

A few examples of recent increases:

• Ohio raised its used dealer bond from $25,000 to $75,000 effective April 1, 2026. Every Ohio used dealer applying for or renewing a license after that date must post the new $75,000 amount.
• Texas doubled its GDN dealer bond from $25,000 to $50,000 back in 2021 and it has stayed there.
• Illinois jumped from $20,000 to $50,000 in 2018.

The pattern is clear: dealer bond amounts only go one direction. If your state has not raised yours yet, it probably will.

The State-by-State Breakdown (2026)

Here are the motor vehicle dealer bond requirements for 15 of the biggest markets. These are state-level requirements. Some cities and counties have their own additional rules.

California

• Bond amount: $50,000 (retail dealers), $10,000 (motorcycle/ATV-only dealers)
• Governing law: California Vehicle Code § 11710
• Filed with: California DMV Occupational Licensing (Form OL 25)
• Notes: Wholesale-only dealers who sell more than 25 vehicles per year also need the $50,000 bond. The bond names the DMV as obligee.

Texas

• Bond amount: $50,000 (general GDN categories)
• Governing law: Transportation Code Chapter 503; increase enacted by HB 3533 (2021)
• Filed with: Texas DMV
• Term: 2 years. Bond must start on the first day of a month and expire on the last day of the month two years later.
• Exempt: Franchised dealers, travel trailer dealers, and trailer/semi-trailer-only dealers.

Florida

• Bond amount: $25,000 (most motor vehicle dealers), $10,000 (certain RV categories)
• Filed with: Florida Department of Highway Safety and Motor Vehicles (Form HSMV 86020)
• Alternative: Florida allows an irrevocable letter of credit for the same amount in place of a bond.

New York

• Bond amount: $20,000 (dealers selling 50 or fewer vehicles per year), $100,000 (more than 50 vehicles), $50,000 (franchised dealers)
• Filed with: New York DMV (Form VS-3)
• Exempt: Trailer-only dealers, motorcycle-only dealers, heavy truck (10,000+ lb) dealers, ATV, boat, and snowmobile dealers.

Pennsylvania

• Bond amount: $20,000 per dealer location
• Governing law: 75 Pa.C.S. § 1335
• Filed with: Pennsylvania Department of Transportation (PennDOT), Bureau of Motor Vehicles
• Notes: Messenger services, card agents, and salvors have separate (higher) bond requirements.

Illinois

• Bond amount: $50,000 per dealership location
• Governing law: Illinois Vehicle Code, 625 ILCS 5/5-102
• Filed with: Illinois Secretary of State
• Notes: The $50,000 amount has been in place since January 1, 2018. First-time used dealers must also complete an 8-hour training course.

Georgia

• Bond amount: $35,000 (used motor vehicle dealers)
• Filed with: Georgia State Board of Registration of Used Motor Vehicle Dealers
• Term: 2 years. Georgia dealer bonds expire on September 30 of even-numbered years to match the license cycle.

Ohio

• Bond amount: $25,000 until March 31, 2026, then $75,000 effective April 1, 2026 for all used motor vehicle, motorcycle, and APV dealers
• Filed with: Ohio Bureau of Motor Vehicles
• Transition rule: Current dealers do not need to increase the bond until their next renewal after April 1, 2026. Any new application or renewal after that date requires the full $75,000.

Michigan

• Bond amount: $10,000 (used vehicle Class B dealers), $25,000 is sometimes cited for certain Class A categories
• Filed with: Michigan Secretary of State (Uniform Vehicle Dealer Surety Bond form)
• Notes: Michigan’s amounts are some of the lowest in the country. Confirm your exact amount with the Secretary of State before applying — it varies by dealer class.

North Carolina

• Bond amount: $50,000 for the original (primary) dealership, $25,000 for each additional location
• Governing law: N.C. Gen. Stat. § 20-288
• Filed with: NCDMV License and Theft Bureau (Form LT-409)

Arizona

• Bond amount: $100,000 (new and used motor vehicle dealers), $25,000 (brokers, wholesale dealers, wholesale auto auctions), $20,000 (automotive recyclers)
• Filed with: Arizona Department of Transportation, Motor Vehicle Division (ADOT MVD)
• Notes: Arizona has one of the highest retail dealer bond amounts in the country.

Washington

• Bond amount: $30,000 (motor vehicle dealers), $5,000 (certain limited categories)
• Filed with: Washington Department of Licensing (DOL)
• Notes: Used vehicle dealers must also complete continuing education for renewal (at least 5 hours per license period).

Virginia

• Bond amount: $50,000 (new/used motor vehicle dealers), $25,000 (motor home, travel trailer, trailer, motorcycle dealers)
• Governing law: Va. Code Title 46.2, Chapter 15
• Filed with: Virginia Department of Motor Vehicles (Motor Vehicle Dealer Board)
• Notes: After the first three years, a dealer can opt out of the Motor Vehicle Transaction Recovery Fund — but only if they maintain a $100,000 bond.

New Jersey

• Bond amount: $10,000 (used motor vehicle dealers)
• Filed with: New Jersey Motor Vehicle Commission (MVC)
• Term: Annual. All NJ dealer licenses and bonds expire March 31 each year.

Colorado

• Bond amount: $50,000 (new/used dealers, wholesalers, powersports dealers, auction dealers), $15,000 (motor vehicle salespersons), $5,000 (small utility trailer dealers under 2,000 lb)
• Filed with: Colorado Motor Vehicle Dealer Board

Always verify with your state. Bond amounts change — Ohio is the proof. The numbers above were current as of April 2026 based on the statutes and licensing authority pages linked at the end of this post. Before you buy a bond, call your state’s dealer licensing office and confirm the exact amount, the exact bond form, and the exact obligee name.

What It Costs

Your premium is a percentage of the bond amount. The percentage depends almost entirely on your personal credit score.

Annual Premium by Credit Tier

Credit Score	Rate on $25,000 Bond	Rate on $50,000 Bond	Rate on $75,000 Bond	Rate on $100,000 Bond
720+	$250 – $500	$500 – $1,000	$750 – $1,500	$1,000 – $2,000
680 – 719	$500 – $875	$1,000 – $1,750	$1,500 – $2,625	$2,000 – $3,500
620 – 679	$1,000 – $1,500	$2,000 – $3,000	$3,000 – $4,500	$4,000 – $6,000
580 – 619	$1,500 – $2,000	$3,000 – $4,000	$4,500 – $6,000	$6,000 – $8,000
Below 580	$2,000 – $2,500	$4,000 – $7,500	$6,000 – $11,250	$8,000 – $15,000

Same bond. Same protection. Wildly different price depending on your FICO score. A dealer with a 720 pays about $500 for the $50,000 California bond. A dealer with a 560 pays $4,000 to $7,500 for the exact same bond.

That is not a typo. It is the surety bond pricing model.

For a deeper breakdown of where that premium goes, see our premium cost explainer. Spoiler: a large chunk of it is not paying for your bond.

What You Actually Need to Apply

Most auto dealer bond applications ask for the same core information:

• Legal name of the dealership (and any DBA)
• Business address and mailing address
• Owner names, home addresses, dates of birth, and Social Security numbers
• Your state-issued dealer license number (or application number)
• The exact bond amount required
• The bond effective date (usually the date your license is issued or renewed)

That is it. No financial statements are typically required for dealer bonds under $100,000. The application is a soft credit check and takes 10 to 15 minutes to complete online.

For bonds of $100,000 or more (Arizona retail, New York high-volume, or Virginia opt-out), some sureties may ask for business financial statements — usually an internally-prepared balance sheet and a year of bank statements.

The Broker Commission on Dealer Bonds

Here is the part most dealers never see on paper. On a $500 annual premium for a $50,000 bond, the retail broker commission is typically 25% to 40%. That is $125 to $200 going to the person who entered your name into an online form.

On a $4,000 premium for a bad-credit dealer, the commission can be $1,000 to $1,600. For filling out one application.

Motor vehicle dealer bonds are among the simplest bonds in the market to underwrite. For good credit, the entire process is automated. The surety pulls your credit, runs a fraud check, and issues the bond electronically within hours. There is no human broker “shopping the market” on your behalf for a $500 premium.

This is the broker problem in plain view. You pay a 30% premium tax so someone can click submit on your behalf. For more on why that commission structure exists and why it persists, see our full explainer.

5 Ways to Save on Your Dealer Bond

1. Shop at Renewal, Not Just at Purchase

Most dealers buy a bond once and auto-renew forever. That is how brokers want it. Each year you renew, get two or three fresh quotes. If your credit improved, your rate should drop. If it did not, at least you know you are not overpaying compared to the market.

2. Buy Multi-Year Where Allowed

Texas and Georgia require two-year bonds. A few sureties will issue two-year or three-year terms in other states and discount the premium 5% to 10%. If you plan to stay in business, lock in the rate.

3. Go Direct to the Surety

For standard dealer bonds under $100,000, you do not need a broker. Direct-to-surety platforms eliminate the retail agent commission. On a $1,500 premium, that can save you $300 to $500.

4. Ask the Commission Question

“What commission are you earning on this bond?” Brokers are legally allowed to answer. Many will not. Some will drop their commission 5-10% when asked. The answer tells you how much room there is in the price.

5. Clean Up Your Credit Before You Apply

This has the biggest impact. Moving from a 640 to a 720 can cut your premium in half on a $50,000 bond. Pay down revolving balances, dispute any errors, and wait 30-45 days before applying. Your quote will reflect your score on the day of the application.

The Bond Form Matters

Every state has a specific bond form the licensing authority will accept. Not any bond. Not a template. Their form.

• California: DMV Form OL 25
• Texas: TxDMV-approved surety bond form
• Florida: HSMV 86020
• North Carolina: LT-409
• New York: VS-3
• Michigan: Uniform Vehicle Dealer Surety Bond form

Using the wrong form means your license application will be rejected. The surety should issue your bond on the correct state form automatically — but check it before you file. The obligee name, the bond number, the effective date, and your business name must match your license application exactly. One typo and the state sends it back.

Renewal and Cancellation

Dealer bonds typically renew on an annual or biennial schedule tied to your license cycle. Miss the renewal and your license can be automatically suspended.

Sureties usually send renewal invoices 30 to 60 days before expiration. If you change sureties at renewal, your new surety issues a replacement bond, you file it with the state, and the old surety cancels with a prorated refund (if any). The state wants continuous coverage — even a one-day gap can trigger a license suspension.

Get Your Estimate

Use our bond cost estimator to see what a motor vehicle dealer bond will actually cost you based on your state, bond amount, and credit tier. No email required. No sales call. Just the number.

For related reading, see our pages on license bonds (the broader bond category dealer bonds belong to) and how to get a contractor license bond — the process is nearly identical for any state-required license bond.

The Bottom Line

Every state in the country requires an auto dealer bond to sell cars legally. The amount ranges from $10,000 (New Jersey used dealers) to $100,000 (Arizona retail, NY high-volume). Most big states sit in the $25,000 to $50,000 range. Ohio just jumped to $75,000.

The bond itself is standardized. Your state decides the amount. The surety decides the rate. Your credit score moves the rate by a factor of 10. And somewhere between you and the surety, a broker is taking 25-40% of every premium dollar.

You cannot change the bond amount — that is set by statute. You can change how much of your premium goes to a broker, and whether you shop at renewal. Those two levers alone save most dealers hundreds of dollars a year on a standard dealer bond. Over a career, that adds up to real money.