Kentucky Auto Dealer Bond

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What is a Kentucky Auto Dealer Bond?

Licensed auto dealers in Kentucky are required to obtain a Kentucky auto dealer bond. A Kentucky auto dealer bond is a type of Kentucky surety bond that guarantees the dealership will operate in compliance with state laws and regulations.

If a customer of the dealership experiences financial damages due to illegal or fraudulent business practices, then a claim can be made against the bond for reimbursement.

How Does a Kentucky Auto Dealer Bond Work?

A Kentucky auto dealer bond involves three parties that enter into an agreement.

The Obligee

The state authority requiring the bond is the obligee, which is the Kentucky Motor Vehicle Commission.

The Principal

The auto dealership is the principal. They are the one that needs the auto dealer bond to become licensed in the state.

The Surety

The surety company provides the bond to the licensed auto dealer and guarantees claims will be paid. It is important to note that any successful claims are repaid by the licensed dealership.

Obligee Details for Kentucky Auto Dealer Bonds

In the state of Kentucky, any licensed auto dealer must secure a bond to fully comply with licensing requirements. The obligee of a Kentucky auto dealer bond is the Motor Vehicle Commission under the Kentucky State Treasurer. Contact information for the obligee can be found below:

Motor Vehicle Commission Office

105 Sea Hero Road, Suite 1

Frankfort, Kentucky 40601

Phone: 502-573-1000

Do I Need a Kentucky Auto Dealer Bond?

Several different types of motor vehicle dealers operating in Kentucky must have a valid license to do business, as well as a Kentucky auto dealer bond. These include:

  • Used vehicle dealers
  • New (franchised) vehicles dealers
  • Wholesaler dealers
  • Auction dealers
  • Motorcycle and leasing dealers

How Do You Get a Kentucky Auto Dealer Bond?

You can start the process of securing the Kentucky auto dealer bond you need by submitting a simple form online. You will receive a free quote based on your business details and instructions on how to finalize bonding for your dealership.

What Does a Kentucky Auto Dealer Bond Cost?

Depending on the type of auto dealership you operate, you may need a Kentucky auto dealer bond between $15,000 and $100,000. As the principal, you won’t be responsible for paying the entire bond amount up front.

The surety company providing your Kentucky auto dealer bond will likely charge you between 1 and 3% of the total bond amount. Some auto dealers will pay a higher rate for their Kentucky auto dealer bond because they pose a higher risk to the surety company.

Can I Get a Kentucky Auto Dealer Bond with Bad Credit?

Personal credit is a major factor in determining the percentage rate you’ll pay on your bond. Negative marks like bankruptcy, tax liens, or civil judgments on your credit report present you as high risk to the surety.

While bad credit does not mean you cannot get a Kentucky auto dealer bond, it may mean you will pay a higher percentage to get covered.

Bond Expiration Date and Terms for Kentucky Auto Dealers

Similar to other states requiring a surety bond from licensed auto dealers, there is no set expiration date for a Kentucky auto dealer bond. Instead, auto dealers must renew their bond at the same time their auto dealer license is renewed with the state. Failure to renew a Kentucky auto dealer bond could lead to an invalid auto dealer license.

How Do I Renew my Kentucky Auto Dealer Bond?

Before your auto dealer bond expires, you will receive a renewal notice with ample time to apply for renewal. It is important not to ignore any renewal notices, because if you allow your dealer bond to expire, you may have a harder time renewing it after the fact.

Frequently Asked Questions

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.

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.

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.

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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