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Massachusetts Auto Dealer Bond

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What is a Massachusetts Auto Dealer Bond?

Having a license to do business as an auto dealer in the state of Massachusetts is required by current law. Part of the licensing process involves obtaining a surety bond, known as a Massachusetts auto dealer bond. Licensed auto dealers are required to put this bond in place to help ensure they comply with the rules and regulations relevant to the sale and exchange of motor vehicles.

When an auto dealer fails to conduct business in a way that is in line with the law, whether that be fraudulent dealings with a customer or non-compliance with the state, a claim can be made against a Massachusetts auto dealer bond. Claims are ultimately the responsibility of the auto dealer as they must be repaid over time.

Who Needs a Massachusetts Auto Dealer Bond?

Like nearly all other states, Massachusetts defines an auto dealer as an individual or a business that engages in the sale, purchase, or exchange of motor vehicles. Both new and used auto dealers are required to have a valid license, and therefore, a Massachusetts auto dealer bond is also necessary.

Massachusetts Auto Dealer Bond Obligee Details

A Massachusetts auto dealer bond is a form of a surety bond, which represents a three-party agreement. The auto dealer is the principal of the bond, or the business or individual responsible for acquiring and maintaining the bond. The surety company provides the bond to the principal and helps manage claims when they arise. The state or local licensing authority responsible for overseeing the motor vehicle dealer industry is known as the obligee of the bond.

In Massachusetts, unlike most other states, the obligee of a Massachusetts auto dealer bond is not a department of the state. Instead, the obligee is represented by the city or county licensing authority in which the auto dealer operates the business.

How Much Does a Massachusetts Auto Dealer Bond Cost?

Although the obligee of a Massachusetts auto dealer bond varies depending on where the business is located, the amount of the bond required is set by the state. All licensed auto dealers must have a bond of no less than $25,000 in order to comply with current regulations. However, this is not the price an auto dealer pays for their bond.

Instead, the surety company providing the bond calculates the price of the bond, known as the bond premium, as a percentage of the total bond amount. The bond premium ranges from 1 to 10% for most auto dealers in Massachusetts. Because claims are initially covered by the surety company, and then repaid by the auto dealer, a bond is a form of credit. To determine the bond premium, then, the surety company must evaluate the financial track record and credit history of the auto dealer applying for a bond.

If an auto dealer has had trouble with finances in the past, such as late payments, court judgments, or liens, the bond premium is a higher percentage than someone who has a clean financial history.

How do You Get a Massachusetts Auto Dealer Bond?

Licensed auto dealers can begin the process of securing a Massachusetts auto dealer bond by submitting a brief application online. Once the surety company reviews the bond amount and credit history of the applicant, a bond premium is quoted. Auto dealers then submit payment for the bond and follow any additional instructions that may be necessary to finalize the bonding process. A Massachusetts auto dealer bond must be renewed periodically, at the same time an auto dealer license renews.


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 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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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.