Massachusetts Motor Vehicle Dealer and Repair Shop Bonds

Get Your Massachusetts Motor Vehicle Dealer Bond

Who Is Required To Purchase a Massachusetts Auto Dealer Bond?

Massachusetts has two primary classes of dealership licenses:

• Class 1 - New vehicle dealers
• Class 2 - Used vehicle dealers

Only class 2, used vehicle dealers, are required to purchase a surety bond as a mandatory licensing requirement.

The bond amount of used vehicle dealers is $25,000.

A separate vehicle dealer surety bond will be required for:

• Each different business name for which the dealer operates
• Each city or town with a place of business

 

Auto Repair Shop Licenses

Independent auto repair shops are required to purchase a surety bond as part of the licensing requirements.

This auto repair shop bond serves a very similar purpose to the dealership bond, ensuring:

• The customer is treated with fair expectations and all promises are kept
• The repair shop pays the correct amount of sales tax to the state

The bond amount for auto repair shops is $10,000.

 

Why is a Massachusetts Motor Vehicle Dealer Bond Required?

The Massachusetts Registry of Motor Vehicles wants reputable and professional vehicle dealers serving the public. This is the reason all dealers are required to get licensed to legally sell vehicles in the state.

The licensing process serves as the first way to eliminate dealers who are not capable of meeting the requirements to effectively sell vehicles.

The surety bond requirement is another level of protection the state uses as the primary way to hold dealerships accountable to the promises they are making to their customers.

Despite the licensing process, every year there will be a small handful of licensed dealers who purposefully harm their customers to make more money.

Examples of these actions can include:

• Transferring a vehicle’s title incorrectly or failing to transfer the title
• Selling vehicles with a missing title
• Misrepresenting vehicle’s mileage, manufacture year, or condition to make a sale
• Stealing customer deposits
• Neglecting to pay the correct sales taxes to the Massachusetts Department of Revenue

If a customer is harmed by these actions or similar, they can make a claim against the dealership's surety bond for financial compensation. The maximum a claim can be is the $25,000 bond amount.

Similarly, if a dealership is found guilty of not paying the correct amount of sales tax on sold vehicles, the Department of Revenue can make a claim against the surety bond to recoup all or most of the amount owed.

 

How Much Does a Massachusetts Auto Dealer Bond Cost?

 

Class 2 Used Auto Dealer Bond Cost

The price of the $25,000 used auto dealer bond is a credit driven bond.

This means the price of the bond will be heavily influenced by these three primary factors:

• Primarily your personal credit of the owner or owners
• Dealership industry experience
• Prior bond claims from prior licenses if applicable

A surety, the insurance company that is responsible for underwriting auto dealer surety bonds, will use these factors to determine a rate.

This rate multiplied by the bond amount is the price you'll pay for your bond.

Even though each surety assesses similar factors when determining a rate, the rates are often vastly different.

And this is how you can save hundreds of dollars when you purchase your bond.

 

How You Can Save Hundreds of Dollars Purchasing Your Dealer Bond

Surety Bonds Direct is a specialized surety agency. It's out sole purchase to help you purchase your surety bond and make the process easy and fast.

We work with multiple A-rated sureties that specialize in auto dealer bonds to find you the lowest rate.

And these rates are often one to two percentage points different.

Let's look at some example pricing. Pay attention to how one to two percentage points changes the price.

The rates in the table are from really good to about average:

The price to purchase your bond is one payment for the entire bond term or 12 months from the effective date.

Having us price shop for you costs you nothing.

So you can request a quote today and know your exact price. It takes less than one business day to collect all the rates.

Click here to start the quote process. If you prefer, you can call a bond specialist at 1-800-608-9950 and speak with a real person.

Once you receive your pricing, you’ll be able to make the right decision for your business and licensing timeline.

 

Auto Repair Shop Surety Bond Cost

The $10,000 auto repair shop bond pricing is a lot more straightforward.

For this bond, we have already secured the lowest possible price of $100. There is no credit check required and you can instantly purchase your bond for a one or three year bond term.

 

How Long Does The Massachusetts Auto Dealer Bond Last?

The bond term for Class 2, used auto dealer bonds is 12 months from the effective date.

The effective date is the bond's activation date you choose when you purchase your bond. As your bond term comes to an end, you'll need to renew your bond for each subsequent year your dealership remains in business.

Renewing your bond is easy.

As a customer of Surety Bonds Direct, you'll be assigned your own bond specialist.

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 Massachusetts Business License/Registration

Getting a Massachusetts auto dealer license is very straightforward and the steps are well outlined on the Registry's website.

At a high level, the steps are:

1. Decide on your business entity and collect all the ownership information
2. Choose between the bound book, Electric Used Car Record book or the Genesys Systems for your vehicle records
3. A list of authorized users who will have access to Section 5 plates with photographed drivers licenses
4. Purchase the auto dealer license surety bond
5. A copy of the lease or deed for your dealership location
6. Photos of all exterior signs as well as the posted business hours
7. Photos of the buildings interior office space with floor plan
8. Complete your application and submit to the Massachusetts Registry or submit it using the online portal