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Tennessee Auto Dealer Bond

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What is a Tennessee Auto Dealer Bond?

Establishing a car dealership in Tennessee means taking specific steps to do so legally. The first is obtaining your auto dealer license which includes securing a Tennessee auto dealer bond. This requirement mandated by the state is meant to protect the customers you serve from fraudulent or illegal activities that may cause financial losses. If a customer of your dealership suffers damages because the business does not follow state laws, they have an opportunity to make a claim against a bond.

A Tennessee auto dealer bond is a type of surety bond where three parties are contractually connected. The surety is the company providing the bond, and your dealership is the principal. The obligee, which is the Tennessee Motor Vehicle Commission, is the party requiring the bond.

Who Must have a Tennessee Auto Dealer Bond?

In Tennessee, any person or business that sells or purchases motor vehicles for profit must be licensed as an auto dealer. Part of the licensing requirements includes securing a Tennessee auto dealer bond. Both new and used auto dealers must meet this requirement, as well as manufacturers, wholesalers, auctions, and recreational vehicle dealers.

Tennessee Auto Dealer Bond Obligee Details

Under Tennessee Dealer-Manufacturer Licensing Laws, the Motor Vehicle Commission is responsible for handling licensing and bonding requirements for auto dealers in the state. The commission operates as a division of the Tennessee Department of Commerce and Insurance. The contact information for the obligee is as follows:

Tennessee Motor Vehicle Commission

500 James Robertson Parkway

Nashville, Tennessee 37243

Phone: 615-741-2241

What Does a Tennessee Auto Dealer Bond Cost?

A Tennessee auto dealer bond of at least $50,000 is required for new and used car dealers, but you are not responsible for paying the full amount. Instead, you pay a percentage of the bond, typically ranging from 1 to 10%. The percentage rate you pay is based on your business financials to a degree, but most importantly, your personal credit.

Surety bonds are a form of credit extended to an auto dealership. The surety company pays for a bond claim initially, but the dealer is responsible for repaying that amount. If your personal credit score is low because of financial issues in the past or present, you are likely going to pay a higher rate for a Tennessee auto dealer bond.

How Do I Get a Tennessee Auto Dealer Bond?

Whether you have excellent or bad credit, getting a Tennessee auto dealer bond is a relatively easy task. You can start by submitting a brief online form to request a quote for your bond, and then complete an application in the same manner. After reviewing the application, the surety agency provides you with your bond price and the next steps for finalizing the bonding process.

Tennessee Auto Dealer Bond Term and Expiration Date

Tennessee auto dealer bonds have a two-year term, based on their issue date. The term of an auto dealer bond in Tennessee aligns with the renewal for an auto dealer license. Failure to renew a Tennessee auto dealer bond along with a license may result in penalties or fines. The surety company providing the auto dealer bond sends a reminder of renewal at least 30 days in advance.


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 our clients low rates, an easy process, and the best in customer service. Learn more about our company.