Texas Motor Vehicle Dealer Bond

The bond amount for a Texas Motor Vehicle Dealer bond is set at $50,000 for all dealers, except for certain license types. However, your actual payment, known as the bond premium, will be determined by factors such as your personal credit score and financial stability. Typically, premiums are paid annually, but in Texas, they are based on two-year terms, meaning you pay two annual premiums every other year.

A solid credit score usually leads to lower premiums because it indicates less risk for the surety, generally around 1% to 3% of the bond amount, depending on your financial situation. This means that, if you have a good credit score, your premium could range from $500 to $1,500.

1. Submit an Application

Begin the bonding process by filling out our online application form. To better understand the bonding risk, we'll need you to provide more details and important documents. We'll guide you through each step to ensure a seamless and hassle-free experience.

We recently helped a new motor vehicle dealership in Texas get their Motor Vehicle Dealer Bond. Even though they knew a lot about the industry, they found the bond process overwhelming and were worried about how it might affect their business. Knowing their dedication to providing great vehicles and service, we guided them through the bond application step by step. By making things simple, we helped them meet Texas requirements smoothly, making their opening a success and building their reputation as a reliable dealer.

2. Get a Bond Quote

Upon receiving your application, we promptly begin processing it. Our goal is to find the best bond rate for you, drawing on our industry expertise to pinpoint the perfect rate. Following this, we promptly provide a free quote and offer expert advice and straightforward instructions to simplify the bonding process for you.

3. Buy Your Bond

Once your bond premium is paid, you're officially bonded. Your bond will be emailed to you, and a paper copy will be mailed if needed.

In Texas, most dealers are required to secure a $50,000 motor vehicle dealer surety bond, which acts as insurance for their customers and is the only accepted form of security. A separate bond is necessary for each GDN category a dealer applies for. The surety bond requirement applies to all GDN (General Distinguishing Number) license types except for Trailer/Semitrailer and Non-Motorized Travel Trailer. Additionally, the bond requirement does not apply to franchised dealers issued a GDN license associated with a franchised dealer license.

These bonds must remain valid for the license term of two years. Additionally, dealers with multiple locations across different cities must obtain a bond for each location. The Texas Department of Motor Vehicles is the entity responsible for the issuance and management of the auto dealer licenses, ensuring compliance with state regulations. 

The department details are as follows:

Texas Department of Motor Vehicles
Motor Vehicle Division
4000 Jackson Avenue
Austin, Texas 78731

For auto dealer bonds in Texas, Lance Surety will notify you in plenty of time for you to seamlessly renew your coverage. We will send you the renewal invoice, which includes your renewal premium along with the payment due date, and as long as you pay your renewal premium by the due date, your bond will be renewed by the surety for another term.

Filing a claim in Texas highlights that an auto dealer's bond safeguards customers rather than the business itself, ensuring the provision of proper services. However, engaging in fraudulent activities or violating regulations can lead to a claim being made against the bond. If the claim is substantiated, your business could encounter substantial financial consequences. You would need to compensate the affected parties for damages up to the bond's penal amount. Initially, your surety will cover the costs, but ultimately, you are accountable for all expenses incurred.

To obtain your dealer license in Texas, you must first apply for and receive a General Distinguishing Number (GDN) from the Texas Department of Motor Vehicles, if you are engaged in buying, selling, or exchanging motor vehicles. Additionally, if you plan to sell new motor vehicles, you must acquire a franchised dealer license from the Motor Vehicle Division, along with the GDN. These steps ensure compliance with Texas regulations governing motor vehicle sales and transactions, enabling you to legally operate as a dealer within the state.