Tennessee Auto Dealer Bond

A Tennessee Auto Dealer Bond costs approximately $500 - $1,500 for those with good credit. While the bond itself must be in the amount of $50,000, you only need to pay a small fraction of that to get bonded (generally 1% - 10%).

The fraction that you pay to get bonded is known as a bond rate or bond premium. Your bond rate is influenced, to some extent, by your business finances. However, personal credit is the main factor. With a good credit score and no previous bond claims, you may be able to obtain your Tennessee auto dealer bond for as little as 1%.

Get a free bond cost estimate

One of our auto dealer clients, Lisa, had her bond premium temporarily increase due to a credit score dip. We collaborated closely with her to minimize the rise in her premium. Over the next year, her credit score recovered—resulting in a substantial reduction in her bond premium when it came time for her next renewal. 

Lisa's experience is a great example of the ever-changing nature of bond costs and the significant influence of one's credit health.

1. Complete a Surety Bond Application

Fill out an online bond application for an instant, no-obligation bond quote. 

This form can be completed in minutes with the following information: 

• Surety Bond Name (Tennessee Auto Dealer Bond)
• Surety Bond Amount ($50,000)
• Contact Information
• Auto Dealer License Number (if available)

2. Get Your Bond Quote

After you submit your application, a soft credit check will be used to determine your bond rate. This quote will be sent to the email you provided. 

Most quotes arrive within minutes. Don't forget to check your Spam folder. 

3. Purchase Your Bond

Log in to our website to purchase your bond and sign the bonding agreement. 

Once complete, we will email you a printable copy of your surety bond. Please double-check that all information is correct. The original bond will be sent to you via mail.

If you have any questions during the bonding process, contact our surety experts. They are available online or at 888-592-6631.

Tennessee auto dealers licensed by the Tennessee Motor Vehicle Commission are required to hold a $50,000 Tennessee Auto Dealer Bond. This includes both new and used auto dealers, as well as manufacturers, wholesalers, auctioneers, and recreational vehicle dealers.

• If an individual or business sells more than five motor vehicles within a year in TN, they are mandated to hold a Tennessee motor vehicle dealer license. Therefore, they must also get an auto dealer bond. 

The purpose of this bond is to ensure that an auto dealer conducts business legally and ethically. If they fail to do so, the bond reimburses the losses of the affected customer. For example, the dealer fails to deliver a valid vehicle certificate.

All Tennessee Auto Dealer Bonds are a contract between three parties:

1. Principal – the auto dealer that needs to get bonded
2. Obligee – the one requiring the dealer to get bonded (Tennessee Motor Vehicle Commission)
3. Surety – the company issuing and financially backing the bond (ex. JW Surety Bonds)

Tennessee auto dealer bonds are valid for a period of two years, starting from the date they are issued. The renewal date of this bond should correspond with the date for your auto dealer license renewal.

• The surety company that issues the auto dealer bond should send out a renewal reminder at least 30 days prior to the expiration date. However, it is your responsibility to ensure it gets renewed on time to avoid licensing penalties.
• Usually, your bond rate will remain the same for renewal. However, changes in your credit or bond claims can impact the amount you pay.

If a claim is filed against an auto dealer bond, an investigation will begin. This inquiry is looking to ensure that the claim is valid and covered by your bond. 

If a claim is valid and covered, then the surety that issued your bond will initially cover the cost. However, you must then pay them back in full. 

Bond claims are inconvenient and expensive. That's why we have dedicated claim advocates on staff to ensure you don't pay for false claims. Have a legitimate claim? They can also assist in finding a way to resolve it at a minimal cost.

To get a Tennessee Auto Dealer License, apply through the Tennessee Motor Vehicle Commission. Information, assets, and documents that you will need include:

• Established Place of Business - the application will require a picture of your signage and a zoning compliance letter.
• Copy of State Sales Tax Registration – done through the Tennessee Taxpayer Access Point (TNTAP).
• Copy of Business Tax License – required in some cities and counties. 
• Financial Background Disclosure – including financial statements. 
• Certificate of Liability Insurance
• $50,000 Auto Dealer Surety Bond 
• Conviction Record – if applicable
• Copy of Labor Rate Form