New Mexico Motor Vehicle Dealer and Recycler Bonds

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Who Is Required To Purchase an Auto Dealer Bond In New Mexico?

License Classifications

New Mexico has the following license classification and each classification is required to purchase an auto dealer bond.

• Manufacturer - produces/manufactures new motor vehicles
• Distributor - helps manufacturers distribute their vehicles into new territories
• Wholesaler - buys and sells new and used vehicles and only sells to licensed dealerships
• Retail Dealer - sells new and/or used vehicles directly to retail customers

Retail Dealer Types

Retail Dealers include:

• New vehicle or franchised dealers
• Use vehicle dealers
• Motorcycle dealers

Vehicle Dismantlers

A vehicle dismantler is an individual or business also known as a "wrecker" and "auto recycler".

The owner of non-repairable vehicle may not transfer ownership of the vehicle to anybody but a licensed dismantler.

While a dismantler is not a "dealer", this license is required to purchase a surety bond before a license application will be reviewed.

Every New Mexico Dealer License Is Independent

This means each license classification requires its own application process and dealer bond requirement.

For example, if you have a dealer license to sell new vehicles and you plan on selling used vehicles, you will have to obtain a used vehicle dealer license and purchase the required auto dealer bond.

Why is a New Mexico Motor Vehicle Dealer Bond Required?

The licensing process is required to validate new auto dealers and ensure they have the appropriate:

• Experience
• Education
• Financial status
• Business organization

Even though New Mexico does a good job of siphoning out poor applicants, there will always be a handful of dealerships who obtain their license and purposefully harm their customers to increase profits.

Examples of these acts of misconduct and fraud include:

• 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 Texas Department of Revenue

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

How Much Does a New Mexico Auto Dealer Surety Bond Cost?

All New Mexico dealer bonds require a quoted rate (or custom bond price) from a surety. The surety is the insurance company that underwrites surety bonds.

Each surety performs their own independent assessment of risk of loss associated with an applicant using primarily these factors:

• Personal credit of the owner or owners
• Business industry and experience
• Prior bond claims if owners have been licensed in the past (if applicable)
• The overall state of bond claims against dealers in New Mexico

Because each surety makes its own assessment, the rates can be drastically different, potentially save you hundreds of dollars.

This is money you can put towards other licensing costs such as:

• Application fees
• Examination fees
• Liability insurance costs
• Dealership setup costs

Example Bond Pricing

When you request your free quote, we will work with our network of A-rated sureties and find you the lowest possible price.

Let's use the bond amount of $50,000 since it's the most common. The rates in the table below range from really good to about average.

The only way to know your price is to request a free quote and get your pricing. Have a bond specialist find the lowest price costs you nothing. Plus there's no obligation to purchase once you get your pricing.

You have nothing to lose by seeing how low of a price you can get. Then you will be able to make the right decision for your business and goals.

How Long Does The Auto Dealer Bond Last?

All New Mexico dealer bonds - including the dismantler bond - have a bond term of 1 year.

This means one year from the effective date (determined by you when you purchase the bond) you will need to renew the bond to keep it active.

Renewing your bond is easy.

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.

New Mexico Dealer Bonds Are Continuous

A continuous bond is a surety bond that once filed, remains active as long as the renewal premium is paid on time. This means you will not have to file a new bond with the Division each renewal period.

Rather, simply pay the renewal premium and the original bond you filed with your initial application remains active.

Motor Vehicle Dealer Bonds And Getting Your New Mexico Business License/Registration

Getting licensed in New Mexico is simpler than most states. Plus they offer electronic applications making the process that much faster.

Read our post about getting your New Mexico auto dealer license. It will help answer any other questions you have as you go through the process.

At a high level, the steps are:

1. Determine your dealer license classification
2. Outline the ownership of the business
3. Purchase your surety bond
4. Provide the required diagrams and images of the dealership and offices
5. Provide the necessary affidavits
6. Submit your application for the initial review

Here are the state laws (chapter 12) for Dealers and Other Businesses Licensed by the Motor Vehicle Division.