Arizona Auto Dealer Bond

In Arizona, auto dealers must hold a valid license if they sell more than four vehicles during the year. To comply with this regulation, licensed auto dealers must also have an Arizona auto dealer bond. The bond requirement is in place to protect customers when dealing with a licensed auto dealership. The AZ MVD Arizona surety bond guarantees that all pre-paid tags and registration fees are paid to the State and that the buyer of the vehicle receives a clean title.

Like other surety bonds, an Arizona auto dealer bond is a contract between the dealership, known as the principal, the surety company providing the bond, and the Dealer Licensing Services agency within the Arizona Department of Transportation, known as the obligee. The surety company guarantees that payment for legitimate claims will be made on behalf of the licensed auto dealer. However, claims are ultimately repaid by the dealership.

Similar to other states requiring auto dealers to hold an auto dealer bond, any individual or entity that engages in the business of selling new or used motor vehicles must have a license and a corresponding Arizona auto dealer bond. Your bond may fall into one of the categories below:

• New auto dealer
• Used auto dealer
• Wholesale auto dealer
• Public consignment auction dealer
• Broker
• Manufacturer

The Arizona Revised Statute, Title 28, Chapter 10, gives the Arizona Department of Transportation the authority to require licensing for auto dealer operating within the state. The Motor Vehicle Division of the department handles licensing applications and requirements, including the need to secure an Arizona auto dealer bond. The contact information for the obligee is as follows:

The state requires an auto dealer bond of either $25,000 or $100,000 to be in place, depending on the type of auto dealer business you operate. Brokers, wholesale auto auction dealers, and wholesale motor vehicle dealers require a $25,000 bond. Any new and used motor vehicle dealers must have a $100,000 Arizona auto dealer bond.

Fortunately, the entire bond amount does not fall on your shoulders. You only pay a percentage of the bond requirement, typically ranging from 1 to 3%. The surety company providing your bond reviews your personal credit and business financials to determine the price you pay. If you have had credit issues in the past, such as court judgments or liens, you will pay a higher percentage because you are a greater risk for a bond claim.

To get your Arizona auto dealer bond, you can submit a simple request form online. The surety company reviews your information and provides a fast quote for your bond, and then provides direction on any application requirements you need to submit and how to finalize the process.

Arizona auto dealer bonds are continuous, meaning they remain in place until they are canceled. There is no required expiration date for auto dealer bonds in Arizona.