Tennessee Auto Dealer Bond

The auto dealer bond is an obligatory requirement for both new and used-car dealers who wish to get a business license in the state of Tennessee. You need to use the physical address of your dealership in the bond form and list the names of all your partners, if you have any.

The bond amount listed on the Tennessee auto dealer bond is $50,000, although this number is not the same as the price needed to obtain the bond. The bond amount is, instead, the maximum penal sum you may have to pay in case of a successful claim against your dealership.

The Tennessee dealer bond is obtained by paying bond premiums every two years. This premium is determined by the bond provider, as they are backing the surety agreement and legally responsible for your claims. The lower risk you pose to the surety, the lower your bond premium will be.

The main way sureties measure risk is by evaluating your personal credit score, though other factors, such as personal and business financials, are considered. For applicants with good credit, premiums are typically in the range of 1% to 3% of the total bond amount.

Getting bonded with bad credit is a bit harder, though definitely not impossible. Lance Surety Bonds has established partnerships with America’s strongest and most trusted A-rated and t-listed bond providers, which allows us to provide the right bond for each applicant.

However, since sureties assume higher risk when underwriting surety bonds for applicants with bad credit, they offer them at a slightly higher price. Bad credit market bonds vary between 5% and 15% of the total bond amount.

For a full breakdown of the factors determining your bond premium, be sure to check our surety bond cost page.

To get your auto dealer bond, you need to apply through a surety bond agency, such as Lance Surety Bonds. With us, you can apply online, which saves you a lot of time and unnecessary paperwork.

Questions about your application? Feel free to call our agents at (877) 514-5146 and they will gladly help.

You must maintain your dealer bond for as long as you hold your Tennessee dealer license. The license needs to be renewed every two years, and so does your dealer bond.

Lance Surety Bonds sends out renewal reminders well ahead of the expiration date of your bond, so you don’t have to worry about staying compliant. As for your premium, it still depends on the same factors discussed above, so if there is no change in your credit score or financial status, your bond renewal premium will most likely remain unchanged.

It’s best to contact the Tennessee Motor Vehicle Commission and ask for a full list of requirements you need to submit before you can get a license. Thorough information is also available on the Commission’s website.

In addition to signing and attaching the original bond form, you will have to send photos of your facilities, lot, and business sign, as well as financial statements accompanied by a compilation letter done by a CPA licensed in Tennessee.

This is an unpleasant scenario for any auto dealer. In case of a claim against you, it’s always better to try and reach a settlement before it goes to court. A valid claim can cost you a lot of money, and means that sureties will want to raise your premium next time you apply for your auto dealer bond.

Make sure you stay up-to-date on all state and federal legislation related to your industry.

In case of a dispute with a client, it’s wise to keep documentation of all communication, as this will help your case in court.

Still got questions about your Tennessee auto dealer bond? Call us at (877) 514-5146 and we’ll do our best to help. We are looking forward to working with you!