Iowa Motor Vehicle Dealer Bonds

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

As we mentioned, there is one dealer license issued by the Iowa Department of Transportation that encompasses the following activities:

• Selling
• Offering
• Brokering
• Acquiring
• Accepting on consignment
• Exchanging
• Retail auctions
• Holding
• Displaying

This also includes acting as an agent for the purpose of doing any of these activities.

Iowa considers you a dealer when you sell more than 6 vehicles in the previous 12 month period. At this point you must meet all of the license requirements including purchasing a surety bond.

Each Location Requires a License

While there are no independent license classifications, each dealer location located outside the primary dealership's county requires a new license.

If you have extension lots located within the primary dealership's county, these can be included under the same license and license requirements.

Why is an Iowa Motor Vehicle Dealer Bond Required?

The Department of Transportation's goal is to have only the most qualified and reputable dealers servicing the public. This is why the licensing process exists and gets refined every few years.

But despite the licensing requirements, each year there will be licensed dealerships who purposefully engage in fraudulent or other unethical business practices which harm their customers to increase profits.

Examples of these fraudulent actions include:

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

These situations are why the auto dealer surety bond requirement exists. The bond is used as the primary tool to hold dealers accountable to the promises they made when they completed the licensing process.

This is why it's the responsibility of the dealer to purchase the bond.

If a customer is harmed by any of these actions or the dealer chooses not to pay sales tax, a claim against the dealer bond for financial compensation, up to the bond amount.

What is the Iowa Auto Dealer Bond Amount?

Iowa, like only a few other states, has one bond amount covering all dealer activities. This makes bond pricing more predictable.

Again, if a customer is financially harmed by a dealer's activities or a dealer is found guilty of not paying the correct amount in sales tax, the customer (or DOT) can make a claim up to $75,000 for financial compensation.

Bond amounts are typically updated every 3 to 5 years, sometimes longer. It depends on the claim activity across the state.

How Much Does an Iowa Auto Dealer Bond Cost?

How is an Auto Dealer Bond Price Determined

The Iowa dealer bond is credit driven. This means your price is going to be unique based on a rate that is quoted from a surety.

A surety is an insurance company that underwrites vehicle dealer bonds. To quote this rate, they typically consider these primary factors when determining their rate:

• The personal credit of the owner and/or owners
• Auto dealer industry and experience
• Prior bond claims if owners have been licensed in the past

When you purchase your bond, you pay one time for the bond term, which is 12 months in Iowa.

And this bond amount is large enough where getting a lower rate will save you hundreds of dollars.

We'll Help You Save Hundreds Of Dollars On Your Dealer Bond

Surety Bonds Direct is a specialized surety agency. This means we work with A rated sureties to find our customers the lowest possible price and make purchasing a surety bond easy.

While every surety uses similar factors when determining their rate, the actual rates quoted can vary by one, two, even three percentage points.

Here is a pricing example where you can see how the price changes drastically based on the rate.

You can see how a rate that is one two two percentage points different can save you considerable money.

Use the money you save to pay all of the required fees for getting licensed and have some money left over for dealer plates or other expenses.

Click here and have us price shop for you.

Or call a bond specialist at 1-800-608-9950.

There is no cost and no obligation to purchase when you request pricing. We just want a chance to earn your business.

How Long Does an Iowa Auto Dealer Bond Last?

The Iowa vehicle dealer bonds have a bond term of 12 months from the effective date. The effective date is the active date you choose when you purchase your bond.

This is another great reason so choose a surety agent like Surety Bonds Direct when purchasing your bond.

You'll be assigned a bond specialist as your primary contact and who manages 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.

Iowa dealer bonds are continuous. This means once you pay your renewal premium the initial bond you filed with the Iowa DOT will remain active. We will issue you a continuation certificate if you need it.

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

Getting your dealer license in Iowa only requires a few steps with only a couple applications and forms.

• Primary application
• Dealer license fees form
• Manufacturer's certification or compliance if you're a franchised dealer
• Zoning affidavit
• Insurance and bond forms

At a high level, the steps for obtaining your dealer licensed are:

• Determine the range of vehicles you'll sell at your dealership
• Outline how your business is going to be setup and attest to it's proper formation
• Purchase your liability insurance and surety bond
• Setup a business office where regular business hours must be established
• Setup a repair facility
• Have a display lot meeting all the requirements for the type of vehicle your selling (for example new vehicle dealers must have enough space indoors to showcase vehicles)
• Have your location inspected and zoning affidavit completed
• If you're selling used vehicles, complete the education classes setup by the Iowa Independent Automobile Dealers Association
• If you plan on leasing vehicles for longer than 60 days there is a separate application you must complete.

Additional Iowa Motor Vehicle Dealer Bond Resources & Links

Iowa Department of Transportation Miscellaneous dealer information, permits and plates

Iowa Code Chapter 322.7 License of Motor Vehicle Dealer

The bonded principal agrees to comply with the statutes of the State of Iowa pertaining to and regulating motor vehicle dealer business. Any individual who purchases a motor vehicle from the dealer and sustains losses or damages resulting from the dealer’s failure to comply with the provisions of the Code of Iowa, Chapters 321 and 322, shall be indemnified by the surety company and the bonded principal. Dealer responsibilities covered by this surety bond include (but are not limited to) furnishing a proper and valid Certificate of Title to the motor vehicle involved in a transaction. The aggregate liability shall not exceed the amount of the bond during any one license year. The bond may be canceled by the surety company at any time by providing 30 days advance written notice to the Iowa Department of Transportation.