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Iowa Auto Dealer Bond

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What is an Iowa Auto Dealer Bond?

To become an auto dealer in the state of Iowa, individuals or businesses must have a license. Obtaining a surety bond is part of the licensing process, because it provides some protection to the public when engaging in business with a licensed auto dealer.

The surety bond for licensed motor vehicle dealers is known as an Iowa auto dealer bond. If an auto dealer in Iowa fails to comply with state law or regulations, a claim can be made against an auto dealer bond.

An Iowa auto dealer bond claim is initially covered up to the claim limit by the surety company, but auto dealers are ultimately responsible. Claims that are successful can disrupt the financial stability of a licensed auto dealer, because the money must be repaid over time.

How Does an Iowa Auto Dealer Bond Work?

An Iowa auto dealer bond is a contract between three parties, with all parties benefiting from the agreement.

The Obligee

The obligee of the contract is the state organization that requires the auto dealer to obtain the bond. In this case, the obligee is the Iowa Department of Transportation. The state benefits from the agreement because the bond makes it more likely that the auto dealer will abide by state and local laws.

The Principal

The principal of the contract is the auto dealer. The auto dealer is required to obtain the bond as a part of the licensing process. The auto dealer benefits from the agreement because the bond financially protects them. If a customer files a claim against them, then the surety company will initially pay the claim.

The Surety

The surety company is the third party in the agreement. They benefit because the principal pays them a percentage of the total bond amount each month or year. The surety provides this protection to the auto dealer and then pays the claim if one is filed. But, the principal must repay the surety over time.

Iowa Auto Dealer Bond Obligee Details

For Iowa auto dealers, the obligee is as follows:

Iowa Department of Transportation

Vehicle & Motor Carrier Services Bureau

10 Euclid, Box 9278

Des Moines, Iowa 50306

Phone: 515-237-3110

Who Needs an Iowa Auto Dealer Bond?

Any business engaged in the sale or exchange of used or new motor vehicles is required to have an Iowa auto dealer license before engaging in any business activities. One of the most important licensing requirements is securing an Iowa auto dealer bond, which extends to all licensed auto dealers in the state.

How do You Get an Iowa Auto Dealer Bond?

Getting an Iowa auto dealer bond is a simple process. Auto dealers who are licensed can submit a brief application online for their auto dealer bond. The surety company will provide a bond quote based on the amount of the bond requested and the credit history of the auto dealer.

Once the quote is generated, the auto dealer pays for the bond and then follows any instructions the surety company provides for finalizing the process.

How Much Does an Iowa Auto Dealer Bond Cost?

Auto dealers operating in Iowa must have an auto dealer bond of no less than $75,000, regardless of the type of vehicles bought or sold. However, this is not the price you pay for an auto dealer bond. The price you pay depends on your credit history and financial stability, determined by the surety company providing the bond.

Because the surety company takes on some risk when issuing an Iowa auto dealer bond, a close look at financial details of the business is necessary. Iowa auto dealers pay between 1 and 10 percent of the total bond amount, and the stronger your credit and finances, the lower this amount will be.

Can I Get an Iowa Auto Dealer Bond with Bad Credit?

You can get an auto dealer bond in Iowa with bad credit, but the percentage you pay of the total bond amount will be higher. This is because the surety company is taking a higher risk by giving you the bond.

How Do I Renew my Iowa Auto Dealer Bond?

An Iowa auto dealer bond must be renewed every year, at the same time the auto dealer's license renews. You should receive a renewal notice before your bond expires. It is crucial that you send in your renewal well in advance of your bond’s expiration date. That way, your auto dealership won’t spend any time with an invalid bond.


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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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.