Motor Vehicle Dealer Bond in Michigan

What this bond requires in Michigan

Michigan requires a $25,000 Uniform Vehicle Dealer Surety Bond for Class A, B, and D dealers under MCL 257.248; the prior $10,000 amount was raised by statute effective January 23, 2023. Classes C, E, F, G, R, and W (e.g., wholesale, salvage, distressed vehicle transporter) are exempt from the bond requirement. The bond is filed on the state uniform bond form with the Michigan Department of State.

Who requires it

The motor vehicle dealer bond is required by the Michigan Department of State, Business Licensing Section (Vehicle Dealer Licensing) under MCL 257.248 (Michigan Vehicle Code - dealer licensing and bond).

How to file in Michigan

Applicants complete the Vehicle Dealer License Application Packet and submit the Uniform Vehicle Dealer Surety Bond (form TR-121) executed by an authorized surety to the Michigan Department of State Business Licensing Section. The bond must indemnify purchasers, sellers, lessees, financing agencies, or government agencies for losses from dealer fraud or misrepresentation; it is filed annually with license renewal.

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FAQ

Common questions

Is a motor vehicle dealer bond required in Michigan?

Yes. Michigan requires motor vehicle dealer bonds issued by an admitted surety. The required amount is $25,000.

How much is the bond in Michigan?

The bond amount is $25,000. Your annual premium is a small percentage of that, based on credit and experience.

Who requires the bond?

The bond is required by the Michigan Department of State, Business Licensing Section (Vehicle Dealer Licensing).

How is the bond filed?

Applicants complete the Vehicle Dealer License Application Packet and submit the Uniform Vehicle Dealer Surety Bond (form TR-121) executed by an authorized surety to the Michigan Department of State Business Licensing Section. The bond must indemnify purchasers, sellers, lessees, financing agencies, or government agencies for losses from dealer fraud or misrepresentation; it is filed annually with license renewal.

What does the bond cover?

Surety bonds protect the obligee, not the principal. If you fail to meet the obligation the bond guarantees, the surety pays the claim and recovers from you.

Is a surety bond the same as insurance?

No. Insurance protects you. A surety bond protects whoever required the bond. You repay the surety for any claim they pay.