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Michigan Auto Dealer Bond

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What is a Michigan Auto Dealer Bond?

A Michigan auto dealer bond is a form of a surety bond that is required for licensed motor vehicle dealers operating in the state. When obtaining a license as an auto dealer, it is necessary to secure a Michigan auto dealer bond so that customers and the state have some form of safeguard against fraudulent or otherwise bad business practices. A bond is not insurance for the dealer or dealership, but instead protection for financial losses that may be incurred by those doing business with the dealership.

Should the dealership conduct business in a way that results in financial damage to the state or the public, a claim can be brought against a Michigan auto dealer bond. The surety company that provides the bond to the dealer initially pays the claim up to the bond amount. However, the auto dealer is liable for these claims and must repay them to the surety company.

Who Needs a Michigan Auto Dealer Bond?

Auto dealers are individuals or businesses that operate a business for the purpose of selling, purchasing, or exchanging motor vehicles. Regardless of the type of motor vehicle sold, an auto dealer must have a valid license to do so. A Michigan auto dealer bond is required as part of the licensing rules, for both new and used auto dealers.

Michigan Auto Dealer Bond Obligee Details

As with other surety bonds, a Michigan auto dealer bond brings together three distinct parties under a contract. The auto dealer is known as the principal of the bond and is responsible for obtaining it as part of the auto dealer license requirements in the state. The surety company is the business providing the bond, and the state licensing authority, or the organization requiring the bond to be in place, is known as the obligee of the bond.

In Michigan, the obligee of an auto dealer bond is as follows:

Michigan Department of State

Dealer Division

Lansing, Michigan 48918

Phone: 888-767-6424

How Much Does a Michigan Auto Dealer Bond Cost?

While a Michigan auto dealer bond represents a required cost to the auto dealer, the price paid for the bond is not typically prohibitively expensive. This is because the surety company providing the bond considered both the total amount of the bond needed and the financial history and credit score of the auto dealer. Throughout Michigan, auto dealers must have a bond of no less than $10,000 in place in order to maintain an auto dealer license. Fortunately, auto dealers pay just a fraction of this bond amount.

The price paid for a Michigan auto dealer bond is a percentage of the total bond, usually ranging from 1 to 10%. Auto dealers with lackluster credit or unstable financial history will pay a higher percentage of the bond total than those who have a healthy financial track record.

How do You Get a Michigan Auto Dealer Bond?

Securing your Michigan auto dealer bond is a simple process. Licensed dealers can submit a short application online, providing the amount of the bond needed and basic information about the business or personal financials. Once the surety company reviews these details, a bond price is quoted. When auto dealers pay for the bond, the surety company finalizes the process by providing the required information and bond forms to the bond obligee. Michigan auto dealer bonds must be renewed 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 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.