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What is an Arizona Auto Dealer Bond?
In Arizona, auto dealers must hold a valid license if they sell more than four vehicles during the year. To comply with this regulation, licensed auto dealers must also have an Arizona auto dealer bond. The bond requirement is in place to protect customers when dealing with a licensed auto dealership. The AZ MVD Arizona surety bond guarantees that all pre-paid tags and registration fees are paid to the State and that the buyer of the vehicle receives a clean title.
Like other surety bonds, an Arizona auto dealer bond is a contract between the dealership, known as the principal, the surety company providing the bond, and the Dealer Licensing Services agency within the Arizona Department of Transportation, known as the obligee. The surety company guarantees that payment for legitimate claims will be made on behalf of the licensed auto dealer. However, claims are ultimately repaid by the dealership.
Who Needs an Auto Dealer Bond in Arizona?
Similar to other states requiring auto dealers to hold an auto dealer bond, any individual or entity that engages in the business of selling new or used motor vehicles must have a license and a corresponding Arizona auto dealer bond. Your bond may fall into one of the categories below:
- New auto dealer
- Used auto dealer
- Wholesale auto dealer
- Public consignment auction dealer
- Broker
- Manufacturer
Arizona Auto Dealer Bond Obligee Details
The Arizona Revised Statute, Title 28, Chapter 10, gives the Arizona Department of Transportation the authority to require licensing for auto dealer operating within the state. The Motor Vehicle Division of the department handles licensing applications and requirements, including the need to secure an Arizona auto dealer bond. The contact information for the obligee is as follows:
What Does an Arizona Auto Dealer Bond Cost?
The state requires an auto dealer bond of either $25,000 or $100,000 to be in place, depending on the type of auto dealer business you operate. Brokers, wholesale auto auction dealers, and wholesale motor vehicle dealers require a $25,000 bond. Any new and used motor vehicle dealers must have a $100,000 Arizona auto dealer bond.
Fortunately, the entire bond amount does not fall on your shoulders. You only pay a percentage of the bond requirement, typically ranging from 1 to 3%. The surety company providing your bond reviews your personal credit and business financials to determine the price you pay. If you have had credit issues in the past, such as court judgments or liens, you will pay a higher percentage because you are a greater risk for a bond claim.
How Do I Get an Arizona Auto Dealer Bond?
To get your Arizona auto dealer bond, you can submit a simple request form online. The surety company reviews your information and provides a fast quote for your bond, and then provides direction on any application requirements you need to submit and how to finalize the process.
Arizona Auto Dealer Bond Terms and Expiration Dates
Arizona auto dealer bonds are continuous, meaning they remain in place until they are canceled. There is no required expiration date for auto dealer bonds in Arizona.
Frequently Asked Questions
Costs are a percentage of the auto dealer bond amount that's required of you, which is based on your personal credit. Use our bond pricing tool to get a quick ballpark estimate.
Yes. You can get you approved for a bond regardless of your credit situation. However, the price will increase. You can apply to get an instant approval. As the largest writer of surety bonds in the U.S., we have access to high risk markets that many other agencies do not.
It only takes minutes, as we can approve you for your bond instantly online. You can get a no obligation quote on our website at any time.
No. An auto dealer bond does not protect you, it protects the public. However, you can protect yourself or your customers by getting fidelity bonds.