Alabama Motor Vehicle Dealer (Designated Agent) Bond

Get Your Alabama Motor Vehicle Dealer Bond

Who Is Required To Purchase an Auto Dealer Bond In Alabama?

Alabama requires the following motor vehicle dealers to purchase a surety bond:

• New motor vehicle dealerships (franchised dealers)
• Used motor vehicle dealerships
• New and used motorcycle dealerships
• New and used trailer dealerships
• Wholesale dealers
• Automotive dismantlers and rebuilders
• Parts recyclers

The only dealers not be required to purchase a bond would be those who exclusively sell of trailers that aren't required to be titled in the state.

Every Alabama License Requires Its Own Bond

While there are lower licensing fees for additional locations, each license does require its own surety bond coverage.

Why is an Alabama Motor Vehicle Dealer Bond Required?

The licensing process for dealers in Alabama is required to ensure only the most reputable businesses are allowed to conduct business in the state.

And despite the licensing requirements, every year there will be dealerships who will purposefully harm their customers to increase profits by:

• Improperly transferring a title
• Selling vehicles with no title
• Misrepresenting vehicle information like milage, manufacture year, or condition
• Stealing customer deposits
• Failing to pay the correct sales taxes to the Alabama Department of Revenue

The auto dealer bond is the primary tool the Alabama Department of Revenue has to hold dealerships accountable to the promises they make to their customers and to the Department.

The surety bond is your commitment and guarantee, that you will follow the rules, pay taxes, and give your customers the best service possible.

How Much Does An Alabama Auto Dealer Bond Cost?

The Alabama auto dealer bond's price is determined by a rate quoted from a surety.

A surety is an insurance company that chooses to underwrite auto dealer bonds in Alabama. And every surety uses their own rules and assessment when determining the rate an applicant should receive.

The primary factors each surety will take into account are:

• The personal credit of the owner or all owners
• Auto dealer industry and business experience
• Prior bond claims if any owner has been licensed in the past

Using these factors, the surety determines their rate.

This rate multiplied by the $50,000 bond amount is the price you pay to purchase your bond for a 12 month period.

BOX: The Equation

Alabama Auto Dealer Bond Price Examples

Here are some examples of pricing based on really good rates to about average.

Notice how much the rate affects the price you pay. And this is why working with a specialized surety agency like Surety Bond Direct is so important.

We'll ensure you pay the lowest possible price.

Now you have an idea of what the price can be. But you can get your exact pricing by requesting a price quote or calling a bond specialist at 1-800-608-9950.

Our bond specialists will price shop for you and find the lowest possible price and you're under no obligation to purchase.

Use this as free information so when it comes time to purchase, you can make the right decision for your business.

How Long Does An Alabama Auto Dealer Bond Last?

Remember, you purchase your bond for a term of 12 months.

When you purchase your bond, you choose an effective date, the date the bond becomes active.

One year from the effective date you'll need to pay a renewal premium on the bond to keep it active.

This is another great reason to work with a surety agency like Surety Bonds Direct.

You get assigned a bond specialist who will manage your bond for you. Your bond specialist will contact you 30 to 45 days in advance to make sure the renewal premium is paid on time so your bond remains active.

Once you pay the renewal premium, you don't have to do anything else. Your bond is active and you can continue selling vehicles.

Motor Vehicle Dealer Bonds And Getting Your Alabama Business License/Registration

Getting your Alabama dealer license is straightforward. Read our Alabama auto dealer license post to learn the details of each step.

The Department of Revenue does a pretty good job of laying out the steps. And it's not as involved as many other states. At a high level the process includes:

• Have a designated agent
• Ensure the designated agent takes the required education classes
• Have your established place of business
• Purchase the dealer surety bond
• Pay all applicable licensing fees
• Purchase the necessary liability insurance
• Determine if you need dealer license or transit plates