New Rules for Colorado Businesses Selling Used Motor Vehicles

A recently passed law in Colorado introduces a new way for businesses to sell used company motor vehicles without obtaining an auto dealer license.

Senate Bill 249 allows companies that want to sell used business vehicles to obtain a Colorado business disposal license instead of an auto dealer license. You can use the new license type if your sale of used vehicles does not exceed 20% of your gross revenue.

The new law also sets rules regarding the used vehicles that you can sell under this license. In addition, you need to meet a list of licensing requirements, including posting a Colorado auto dealer bond.

In the sections below, you can find the essential details in the bill regarding the new business disposal license.

The new Colorado business disposal license

Colorado Senate Bill 249 creates a new business disposal license for companies that want to sell used business motor vehicles without obtaining a state license as dealers. The bill was approved on May 28th, 2019. It comes into force 90 days later.

Previously, if you wanted to sell more than 20 vehicles used for business purposes in a period of two years, you had to obtain a used car dealer license from the state Department of Revenue’s Auto Industry Division. The new bill allows you to skip this rule and get a Colorado business disposal license instead, if the vehicle sales are not more than 20% of your company’s gross revenue.

In addition, used vehicles should meet certain criteria. They should comply with the following:

• Not passenger vehicles (can be a 10+ person vehicle or truck with an enclosed cabin and open cargo area)
• Owned for more than one year by the company
• Used solely for business purposes
• Titled in the name of the company

In order to get the business disposal license, you will have to comply with a list of requirements. Notably, all businesses who wish to sell used company vehicles under this license type will have to obtain a $50,000 surety bond, similar to the rest of auto dealers.

The purpose of the bond is to guarantee that you will adhere to all applicable Colorado laws when selling used vehicles. This is a safety mechanism that protects your customers against potential fraud or misuse. They have a right of action in case they suffer any loss or damages due to fraud or fraudulent representation you have committed as a holder of a business disposal license.

Getting an auto dealer bond

In order to obtain a $50,000 surety bond for your business disposal license, you will have to pay a bond premium. You do not have to cover the whole required bond amount. The premium that you owe is a percentage of it, which is set on the basis of your financial status.

Sureties consider applicants’ personal and business finances when assessing the bonding risk. They will take into consideration your credit score, company documents, and even fixed and liquid assets you may showcase. By examining these factors, they will set your bond cost.

If your finances are in good shape, the rates you can expect are between 0.75% and 5%. Thus, you can pay as little as $375 to $2,500 for your $50,000 bond.

Do you have further questions about the new auto dealer bond requirement for Colorado business disposal licenses for used vehicles? Don’t hesitate to contact our bonding specialists at 877.514.5146.