Colorado Auto Dealer Bond

Dealer bonds are a prerequisite for the licensing process for all dealers in the state. This includes new and used-car dealers, as well as wholesalers, wholesale auctioneers, and dealers of powersports vehicles.

The exact premium you will have to pay will be determined by the surety bond company which underwrites your bond. Because sureties assume legal and financial risk for your actions, they will want to evaluate your finances and credit report, to assess the risk they undertake by underwriting your bond.

If you have a good credit score, your premium will likely not exceed 2.5% of the total amount required, which is $50,000. Here’s an estimation of your likely premium, based on your credit score.

Keep in mind that besides the information in your credit report, sureties can evaluate other factors as well if you submit them. Such factors can include your resume demonstrating your auto dealer experience, or financial statements showing liquid assets, for example.

You can find useful tips on our What Does a Surety Bond Cost? page if you want to learn more about how your premium is determined.

An applicant with bad credit would mean a higher risk for the surety, which is why bonding is not always easy if you have a spotty credit report.

This is why we have our bad credit surety bonds program, through which we can help 99% of Colorado dealers get bonded. Premiums generally vary between 2.5% and 10%. Our experts always make sure they provide specific advice on how you can reduce your cost as much as possible.

The dealer bond application is straightforward and worry-free. Our online application takes just a few minutes to complete. After submission, we’ll contact you with your free bond quote.

The bonding process requires that you sign an indemnity agreement with the bonding company. After finalizing all paperwork and processing your payment, we do our best to get your bond issued in a few business days.

Bond renewal generally takes even less time than the initial application. We send out reminders to all our clients, so you never have to worry about missing a deadline.

Colorado licenses and dealer bonds need to be renewed annually to remain active. Your bond renewal quote will rarely vary from year to year, unless there is a significant change in your credit report, credit score, or other cost-determining factors.

The licensing process will vary depending on what type of dealer license you wish to obtain. Besides your original bond form, you will also have to submit some additional documentation, such as:

• A business plan
• Photographs of your business premises
• Education certificate
• Sales tax license
• Application form
• Applicable fees

Be sure to check all other requirements pertaining to your type of license at the website of the Colorado Department of Revenue.

A bond claim can be filed against a dealer who is in violation of the Colorado Revised Statutes, or has used fraudulent or unethical business practices.

The best course of action when you face a dispute is to resolve it out of court. If this isn’t possible, you will have to build a strong case. If there is sufficient proof that you are not guilty, you can alert the surety which can provide legal assistance. If the bond is proven, however, you have to reimburse the claimant up to a sum not exceeding $50,000, depending on the type of violation.

In general, if you operate your business legally and responsibly, there shouldn’t be any reason to worry about bond claims. It’s important to be up-to-date with all regulatory changes that might affect you, and to always train your staff well.