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Maryland Auto Dealer Bond

How much does an auto dealer bond cost in Maryland?

The cost of Maryland vehicle dealer surety bonds varies significantly from one type to another because there are many different bond amounts required. Highly qualified applicants are typically approved for 1-3% of the total bond amount, but the exact cost will be determined by an underwriter after reviewing an applicant’s qualifications. Bond amounts for dealers are based on the type of license and the amount of vehicles sold during the previous year. For new applicants, an estimate of the number of vehicles to be sold will suffice when determining the amount of the bond.

The following is a list of license types required to be bonded based on the previous year’s vehicles sold:

If you need to be bonded as a motorcycle or trailer dealer, please visit our Maryland motorcycle or trailer dealer page.

Why do I need this bond?

An auto dealer bond holds the principal (auto dealer) liable for any and all financial losses incurred as a result of his or her business malpractice.

By posting a Maryland auto dealer bond, auto dealers agree to the following terms and more:

  • A licensed auto dealership may only operate in one fixed location per license. The license should be prominently displayed at all times in the dealership.
  • Accurate records of all vehicles that are bought and sold must be maintained and available for inspection at all times.
  • A dealer cannot accept any amount greater than 5% of the vehicle’s price as a deposit. This law does not apply to the sale of motor homes, and no motor home may be sold with a deposit higher than 10% of the price.

What’s the fine print?

This bond is required by the state of Maryland Department of Transportation Motor Vehicle Administration. The dealer license number must be listed on the bond. Motor vehicle dealer bonds are continuous until canceled. The state requires surety companies to provide them with at least 45 days’ notice before canceling a bond.

How to become a motor vehicle dealer in Maryland

According to the Maryland Vehicle Law, a license will only be issued if:

  • the applicant’s business is the only business conducted at the location
  • the business is conducted from a building adequate and appropriate from which to sell vehicles
  • the business maintains an equipped auto repair service

A new vehicle dealer may participate in up to 2 auto shows per year. A licensed business may participate in an auto show if it files an application with the department at least 60 days prior to the event detailing the location, dates and names of participating professionals.

The following documents are required as part of the licensing process:

  • application for vehicle dealer’s license
  • zoning approval form (must be approved by your local zoning authority)
  • Department of Assessment/Taxation form or letter verifying that you are registered to do business in the state of Maryland
  • completed dealer site inspection
  • repair facility contract
  • dealer orientation request
  • Electronic Registration and Titling (ERT) Provider Contract
  • criminal background check
  • surety bond
  • worker’s compensation insurance information
  • copy of trader’s license
  • use and occupancy permit
  • franchise approval from manager
  • new vehicle certification form

The application must also contain both the legal name of the business and its full corporate name (listed as “Trading As” or “T/A”, if applicable). Once assigned, the license must be displayed at all times in a conspicuous location within the office.

Additional Resources

Motor Vehicle Administration Vehicle Dealer Business Licensing Packet with Bond Form

Code of Maryland Regulations Title 11 Department Of Transportation Subtitle 12 Motor Vehicle Administration — Licensing Of Businesses And Occupations

Maryland Department of Transportation: Motor Vehicle Administration

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