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Alabama Auto Dealer Bond

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What is an Alabama Auto Dealer Bond?

Throughout the country, businesses operating as licensed car dealerships are required to obtain an auto dealer bond. An Alabama auto dealer bond is a necessity for auto dealerships serving customers in the state. This type of surety bond is required to obtain an Alabama auto dealer license, mandated by the state’s Motor Vehicle Division.

An Alabama auto dealer bond works as a safeguard for car buyers. The bond helps ensure your dealership is operating according to state and federal laws when it comes to buying and selling vehicles. Should a customer be financially harmed when dealing with your business, a claim can be made against your Alabama auto dealer bond.

Who Needs an Alabama Auto Dealer Bond?

Owners of certain dealerships are required to have the appropriate licensing in Alabama, and this includes securing an auto dealer bond. All new and used motor vehicle dealers, motorcycle dealers, trailer dealer, and wholesaler dealers must have a surety bond in place. Reconditioners and rebuilders must also have an Alabama auto dealer bond.

Alabama Auto Dealer Bond Obligee Details

Section 40-12-391 of the Code of Alabama 1975 mandates the licensing requirements for businesses operating as auto dealers in the state. The laws put in place to ensure surety bond requirements are met as part of the licensing process give authority to the Alabama Department of Revenue as the obligee of auto dealer bonds. The obligee details are as follows:

Alabama Department of Revenue

Motor Vehicle Division

2545 Taylor Road

Montgomery, Alabama 36117

Phone: 334-242-9000

What Does an Alabama Auto Dealer Bond Cost?

Like other surety bonds, an Alabama auto dealer bond costs a percentage of the total bond amount required by the state. For new and used auto dealers, the state requires a minimum $25,000 bond to be secured. You only pay a portion of this amount, however, typically between 1 and 3%. An auto dealer with strong credit, a track record of responsible business management, and experience in the industry is likely to pay a lower percentage than a dealership without these traits.

An Alabama auto dealer bond may cost a higher percentage, between 5 and 10%, if your personal credit or business financials are not strong. Past liens or court judgments, bankruptcies or foreclosures, and late or missed payments bring down your credit score. These negative marks can lead to a higher rate for your Alabama auto dealer bond because you pose a higher risk to the surety company.

How Do I Get an Alabama Auto Dealer Bond?

Even if credit is an issue, you can still get an Alabama auto dealer bond. You can submit your application easily online and get a fast quote based on the details you provide.

Alabama Auto Dealer Bond Terms and Expiration Dates

Alabama auto dealer bonds are continuous, meaning once an initial bond is granted a continuation certificate must be provided at the end of each renewal period. Expiration dates for Alabama auto dealer bonds are in line with licensing renewal deadlines annually.

For licensed auto dealers in Alabama, the licensing period begins on October 1 and extends through September 30 of the following year. An auto dealer bond may be secured at any point during the licensing period, but renewal is required by October 31 each year.


Frequent Questions

What does an auto dealer bond cost?

Costs are a percentage of the auto dealer bond amount that's required of you, which is based on your personal credit. Use our bond pricing tool to get a quick ballpark estimate.

Can I get a bond with bad credit?

Yes. You can get you approved for a bond regardless of your credit situation. However, the price will increase. You can apply to get an instant approval. As the largest writer of surety bonds in the U.S., we have access to high risk markets that many other agencies do not.

How long does the application take?

It only takes minutes, as we can approve you for your bond instantly online. You can get a no obligation quote on our website at any time.

Can I get auto dealer bond insurance to protect myself?

No. An auto dealer bond does not protect you, it protects the public. However, you can protect yourself or your customers by getting fidelity bonds.


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Jennifer Henson
Our company has been with JW Surety for several years now so when we needed to obtain a bond for a new company, we immediately went to them for help. Our rep, Melissa, was extremely helpful and prompt which made the process extremely easy for me.
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Trying to get a local Surety Bond was like driving a car on three tires. I searched Surety Bonds and found JW Surety Bonds. I got online and filled out the information and with in 30 minutes received a response from Melissa. She was informative, friendly and helpful. One more super satisfied customer.

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About JW Surety Bonds
We are a family owned and operated agency established in 2003. We started with just two people, and grew to become the largest volume bond producer in the nation with 50+ employees. Since day one, our team focus has been on providing real-time online quotes, an easy process, and the best in claims defense. Learn more about our company.