Your auto dealership business in Texas: Tips on getting a lower surety bond price

In a state like Texas with abundance of space and motorways, the auto dealership business seems to be a lucrative one. Getting an auto dealership license, however, involves several administrative steps in order to obtain your registration and permission to operate in the state.


The starting point for the licensing process is the Texas Department of Motor Vehicles (TxDMV). There you can find in detail all the requirements that you need to meet, as well as all the forms to be filled and the fees that you have to pay before opening your business. There is even a Dealer Manual, which is quite useful.


Some of the most important steps are completing the Auto Dealer License Application, available on the TxDMV website, and afterwards obtaining your General Distinguishing Number with the Texas Department of Transportation, which is a legal requirement for any activities involving buying or selling of motor vehicles. You will need to have a permanent office/place of operation and you will need a surety bond as a requirement for the license issuance.


Palomar Health Center
Austin, Texas


I guess that while reading this, by now you are already quite worried about the costs of the whole process. Indeed, obtaining an auto dealership license is not exactly a walk  in the park. There are, however, ways to minimize the difficulties and the financial burden of the process. One of these is to save on the surety bond requirement of the license. So, how does one do this?


Wait, what is an auto dealership bond?

An auto dealership bond is a kind of surety bond that is required by the State of Texas in order to be granted a license. It functions as a guarantee that your business is committed to abiding by the rules of the state. It is required both for new and used car dealers and is a safety net for your clients and the state.


How do I get bonded?

Nowadays, applying for an auto dealership bond is unbelievably fast and efficient – especially if you turn to the right surety bond agency. You can apply easily and get an instant online approval.


How do I get a lower bond price?

In principle, the price of the bond is a percentage of the amount for which you get bonded. In case you would like to have a rough idea, you can get an initial estimate of the surety bond price. This can be useful for you, so that you can plan it in your general costs.


License Bond: How to Get the Lowest Surety Bond Price
See how you can get a lower surety bond price [Video]


And here comes the trick: there are also possibilities to get an auto dealership bond through consideration only of your credit situation. This gives you better chances for a lower bond premium and much more freedom in the bonding process. You would not need to make elaborate schemes and go through complicated underwriting algorithms. You would have to consider improving only one factor – your credit score. Some surety bond agencies are able to do this because of their “safety in numbers” – they operate at such a large scale that this simply is feasible. Thus, the most important tip for obtaining a lower surety bond price for your auto dealership license is to boost your personal credit score and use a flexible surety bond agency with a massive volume of bond writing.


And now, down to business: how do you lower the price of the bond? The fine line is in the approach towards assessing your financial situation. Some surety bond agencies take into account a multitude of factors when estimating the bond price, which include personal credit, bank balances, years of experience, business financials and so on. Thus, sometimes even with a perfect personal credit, you might get a high surety bond price because some of the other criteria drives it up.

Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog. He has held a range of different roles within the surety industry, from agent assistant to bond issuer, which gives him a unique insider perspective on surety related topics.

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