Alabama Auto Dealer Bond

As of October 1, 2021, all dealers who want to get licensed as new or used car dealers, wholesalers, re-conditioners and re-builders, or motorcycle and trailer dealers, need to post a $50,000 Alabama motor vehicle bond.

This surety bond amount is different from your actual surety bond cost. The amount signifies the reimbursement that affected parties can demand in case there is a proven claim against you.

What you will have to pay to get bonded, however, is only a percentage of the bond amount, which is called the bond premium. It is usually in the range of 1% to 3% for standard market bonding.

This means that for your $50,000 Alabama auto dealer bond, you might end up paying between $250 and $750.

When you apply for a bond, your surety needs to review your full application. It assesses your personal credit score, business assets and liquidity, financial stability, and professional experience. Your bond premium is decided on the basis of these factors. The better they are, the lower it will be.

Make sure to consult our surety bond cost guide, to get the full picture of how your surety bond cost is determined.

We know that Alabama auto dealers with problematic finances, past tax liens, civil judgments, or bankruptcies have a hard time getting bonded. That’s why we’re proud to offer our Bad Credit Program.

Even if your credit score is far from stellar, we can underwrite the Alabama auto dealer bond that you need. The usual premiums are in the range of 5%-10% to compensate for the higher risk involved in the bonding.

Lance Surety Bonds forges strategic partnerships with numerous A-rated, T-listed surety companies, so we are able to shop around for you and get you the best rate for your specific case.

Your Alabama auto dealer bond is a few clicks away! Apply Online today for your free, no-obligations quote. When you submit your full application, we’ll get your exact bond quote back to you as soon as possible.

For any questions about the bonding process and your bond application, call us at (877) 514-5146. Our bonding experts are here to help.

Check out our How to Get Bonded page for even more great resources.

Your Alabama auto dealer bond is continuous, so you need to keep it active in order to sustain your Alabama auto dealer license. You have to renew the bond together with the license renewal. This needs to be done every year before September 30.

Getting bonded with Lance Surety Bonds means you will receive a renewal reminder a few months in advance. This gives you enough time to renew your Alabama dealer bond and keep your license. We will also send you mail, fax and email, to make sure you are aware of the renewal deadline approaching.

Don’t forget that your Alabama dealer bond price can change from year to year. If you improve your credit score and overall finances, you can reduce your surety bond cost over time.

Besides obtaining an Alabama motor vehicle dealer bond, dealers who want to obtain or renew their Alabama car dealer license need to furnish a list of other documents too. They should send a complete application to the Motor Vehicle Division at the Alabama Department of Revenue.

The additional documents include providing a proof of your business location and sign, your sales tax number and liability insurance, among others. Your license expires every September 30, so you need to renew it annually together with your Alabama auto dealer bond.

It’s important to remember that surety bonds do not work like insurance for your dealership.

Instead, Alabama auto dealer bonds protect your clients from potential misuse or fraud on your side. If you do engage in such activities, an affected party can file a claim against your bond.

In case the claim is proven, a compensation up to the penal sum of the bond, $50,000 in the case of Alabama auto dealer bonds, may be required. Your surety will cover the expenses initially, but you are liable to fully repay it shortly afterwards.

Because of this, claims pose a serious risk to your dealership. The wisest course of action, naturally, is to avoid them, as they can harm your reputation and ability to get bonded too.