Colorado Auto Dealer Bond

1. Submit Your Bond Application

You can apply for your bond online. Just enter some basic information about yourself and your business, and you should be able to submit your application within a matter of minutes. If you have any questions, we are more than happy to assist you.

We recently helped a client who was trying to open an auto dealership. He was overwhelmed by the process, and it’s easy to see why. According to the Colorado Department of Revenue’s website, new dealers must go through 25 individual steps, and securing a surety bond is step number 10. Thanks to our assistance, he was able to move through bonding quickly and get his business started that much sooner.

2. Get a Quote

At Lance Surety Bonds, we want to provide you with the best premium rate possible. In most cases (especially if you have a high credit score), we can get you a quote within minutes. However, sometimes, processing your application may take up to 24 hours.

3. Purchase Your Bond

Once you receive your quote, you can pay the bond premium and you’re officially bonded in Colorado. You’ll receive an email copy of the bond, and you can request a paper copy if necessary.

The Colorado Department of Revenue requires all motor vehicle dealers to post a bond of at least $50,000. The state also includes power sports vehicles (e.g., ATVs, dirt bikes, etc.) within this requirement. It also doesn’t matter if you sell new or used vehicles to individuals or at wholesale or auction.

Dealers are also responsible for obtaining surety bonds for each salesperson they employ. If you have five salespeople on your staff, you must buy five bonds. These bonds are attached to the individual, not the position. So, if one salesperson leaves and another takes their place, you still have to buy a new bond.

The only exception to the $50,000 bond requirement is if you sell small trailers weighing 2,000 pounds or less. However, you can only sell small trailers and no other vehicles.

Auto dealer licenses are valid for 12 months from your approval date. You must also renew your bond with your license so you can stay current and compliant with Colorado state law.

Lance Surety Bonds will notify you long before your renewal date so you can take care of it as quickly as possible. While there is a 30-day grace period for renewals, you may incur penalties and late fees.

The purpose of having a bond is to protect consumers and allow them to file a claim in case of fraud or wrongdoing. When someone files a claim in Colorado, they do so directly with the surety company (e.g., Lance Surety Bonds).

The surety investigates the claims to determine their validity. If the claimant has a case, the surety company pays them, up to the bond's penal sum (e.g., $50,000). Afterward, the principal is liable to reimburse the surety for any payments made to the claimant.

According to the Department of Revenue, auto dealers must complete 25 steps to obtain their license and start selling vehicles. The first requirements are a net worth of at least $100,000 and a credit score of at least 701 with Experian.

From there, you must also submit various documents, including the dealer/wholesaler checklist, application form, mastery exam, and more. The whole process is a bit complex, but if you get all the paperwork in order first, it’s relatively straightforward to get your Colorado auto dealer license. You can also visit the Department of Revenue’s website to learn more.