Motor Vehicle Dealer Bond

Motor Vehicle Dealer Bond

What Businesses Need the Motor Vehicle Dealer Bond? 

The Motor Vehicle Dealer Bond is a requirement for individuals who are in the business of selling, buying, or exchanging more than five vehicles per year. Motor vehicle transactions must be conducted in a permanent place of business. The dealer license and bond requirements apply to franchise, wholesale, independent, and independent mobility vehicle dealers.

A dealer general distinguishing number is issued by the Texas DMV once dealers receive licensure and is required to operate as a motor vehicle dealer, except for: 

  • Individuals who sell less than five vehicles in a calendar year that are registered under that person’s name 
  • Governmental agencies at the state or federal level
  • Insurance companies selling a car that was received from the owner as a result of paying an insurance claim
  • Motor vehicle dealer licensed in another state
  • Other exclusions found in Section 503.024 of the Texas Transportation Code

What’s the Purpose of the Texas Motor Vehicle Dealer Bond?

Motor vehicle dealers in Texas must have a surety bond submitted to the Texas Department of Motor Vehicles before they can receive a General Distinguishing Number (GDN) for their license. The Motor Vehicle Dealer Bond shall be held in an amount of $50,000 to protect the people of Texas from a dealer’s illegal actions.

How Much Does the Motor Vehicle Dealer Bond Cost?

The cost of a Motor Vehicle Dealer Bond can vary between $250 and $5,000. Underwriting factors, like credit, financial history, and business information can all influence the cost that a surety company can offer. 

How Is the Motor Vehicle Dealer Bond Filed?

The surety company will complete all fields of the Motor Vehicle Dealer Bond. A copy of the bond must be sent to the principal so they can file it electronically through the DMV’s online portal to get licensing started. The original bond form must still be physically mailed in to the DMV at the following address:

Attn: MCD-Permits
4000 Jackson Avenue
Austin, TX 78731

Can the Motor Vehicle Dealer Bond Be Cancelled?

Yes, the surety company can cancel the Motor Vehicle Dealer Bond by giving the TxDMV a 35 days’ notice. Once the cancellation period is over, the TxDMV will release the surety company and the motor vehicle dealer from liability. 

Do Motor Vehicle Dealer Bonds in Texas Renew? 

Yes, motor vehicle dealers are obligated to renew their Motor Vehicle Dealer Bond to align with their general distinguishing number (GDN) license. GDN licenses have a set term which the bond must adhere to: the first day of the month to the last day of the 24th month from that date (for instance: April 1, 2016 to March 31, 2018). The license holder must have an active bond at all times during the license. 

Texas Auto Dealer Bond

Complete application and click submit button at the bottom of the form.

Bond Name: Texas Motor Vehicle Dealer Bond
Bond Term: The state requires that the bond be effective the first day of the month for a two-year term, expiring the last day of the previous month.
Bond Amount: $50,000
Premium: Starting at $425.00
Underwriting based on the owner’s personal credit, claim experience and years licensed.
Texas Department of Transportation
Motor Vehicle Division
PO Box 13044
Austin, TX 78711-3044

Open Application (Complete, Print and Sign at the bottom of the form. See page 2 for signature instructions.)

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