Texas Motor Vehicle / Auto Dealer Bond Cost

While $50,000 might seem like a large amount to pay, in reality, you only need to pay a percentage of it to get bonded, which is called the bond annual premium. The surety company will look at several factors to determine your Texas motor vehicle dealer bond cost, most importantly, your credit score. Factors such as years licensed and years of industry experience will also play a factor in your dealer bond cost.

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• If your credit score is above 650, you’ll likely have to pay between .75% and 2% of the bond amount.

• For applicants with credit scores between 600 and 649, the rates range between 2.5% and 4%.

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Texas Motor Vehicle / Auto Dealer License and Renewal

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Who is required to be licensed?

The surety bond requirement applies to all GDN license types except for Trailer/Semitrailer and Non-Motorized Travel Trailer. The bond requirement does not apply to Franchised dealers issued a GDN license associated to a Franchised dealer license.

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What are the bonding requirements?

• Most dealers are required to obtain a $50,000 motor vehicle dealer surety bond, which is like an insurance policy for the dealer’s customers and is the only acceptable form of security. A separate bond is required for each GDN category that a dealer applies for The surety bond is required for: Motor vehicle dealers.

• The bond must be valid for the term of the license (2 years). The bond must begin on the first day of the month and expire on the last day of the month, two years later. The expiration month will always be the month prior to the start date (for example, 9/1/20 through 8/31/22 or 1/1/20 through 12/31/21).

• Motor vehicle dealer with multiple locations in different cities will be required to have a bond for each location. When you get your motor vehicle dealer bond with All American Bonds and Insurance we can help get you those extra bonds at a discount.  

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What are the insurance recommendations?

It is recommended that all motor vehicle dealers in the state of Texas obtain liability insurance coverage. Some examples include:

• Garage Liability Policy with a minimum of $85,000 Premises and Auto Liability Coverage

• Dealer Inventory Physical Damage Coverage

• Uninsured and Underinsured Motorist Coverage

• Garage Keepers Coverage - (if you do repairs, or paint & body work)

• Property Coverage for any buildings or tools

• Medical Payments of $1,000, $2,000, or $5,000

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