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South Dakota Motor Vehicle Dealer Bond

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How much does an auto dealer bond cost in South Dakota?

The South Dakota Department of Revenue and Regulation’s Division of Motor Vehicles requires motor vehicle dealers to post surety bonds in varying amounts prior to conducting business within the state. The required bond amount varies based on the type of vehicles the dealer plans to handle. Applicants should verify their required bond amount with the state prior to bonding.

These bonds are subject to underwriting consideration, so the price you’ll pay depends on a review of your personal credit report. Bad credit? Don’t worry! SuretyBonds.com offers an exclusive bad credit bonding program through which we approve 99% of all applicants for the bonds they need quickly, easily, and affordably.

Bond Type
$5,000Motor Vehicle Dealer BondMotorcycle or snowmobile dealer
$10,000Motor Vehicle Dealer BondTrailer dealer or emergency vehicle dealer
$20,000Motor Vehicle Dealer BondBoat dealer
$25,000Motor Vehicle Dealer BondMotor vehicle dealer, mobile/manufactured home dealer, or final state manufacturer dealer

Why do I need a South Dakota auto dealer bond?

South Dakota Codified Law 32-6b requires auto dealers conducting business in the state to obtain a motor vehicle dealer license with the SD Department of Revenue. Those who qualify as doing such business are individuals or businesses that sell or deal five or more vehicles in a 12-month period. The South Dakota legislature enacted license and regulations to guarantee dealers proceed with ethical business practices and pay the required taxes and fees. To provide financial security for the enforcement of the license law, dealers must purchase and maintain a $5,000, $10,000, $20,000 or $25,000 motor vehicle dealer surety bond to be eligible for licensure.

Motor vehicle dealer surety bonds in South Dakota are put in place to ensure that principals (vehicle dealers) conduct all business in accordance with the laws of the state. Specifically, these bonds ensure that principals pay all losses, damages, and expenses that occur as a result of the principal’s failure to title any motor vehicle, breach of warranty, or otherwise fraudulent action.

If the principal fails to adhere to the letter of the law and the terms of the surety bond contract, the bond protects any purchaser or holder of a lien noted on the certificate of title up to the full penal sum of the bond. The principal must reimburse the surety for any damages paid out.

When does my South Dakota motor dealer bond expire?

South Dakota motor vehicle dealer bonds remain in full force and effect until canceled. The bond can be canceled by the surety if the surety gives written notice of cancellation to the Department of Revenue and to the principal. Cancellation becomes effective 30 days after the mailing of said notice.

To produce this bond, surety underwriting companies must know the type of vehicle(s) the applicant plans to handle.

How to become a motor vehicle dealer in South Dakota

In the licensing process to become an auto motor dealer in South Dakota, there are approximately seven steps an applicant must undergo. For more detailed information, applicants can access the Dealer Requirements Packet and the Procedures Manual for South Dakota licensing.

Step 1: Note the License Type

Because there are specific licenses that correspond to the nature of an auto dealer’s business, South Dakota requires applicants to identify the license they are applying for. Listed below are the different types of South Dakota dealer licenses. 

  • Vehicle Dealer – Sells new or used motor vehicles
  • Used Vehicle Dealer – Sells used motor vehicles only
  • Mobile/Manufactured Home Dealer – Sells mobile/manufactured homes
  • Motorcycle Dealer – Sells motorcycles
  • Snowmobile Dealer – Sells snowmobiles
  • Trailer Dealer – Sells trailers
  • Boat Dealer – Sells boats
  • Emergency Vehicle Dealer – Sells emergency vehicles (ambulance, fire truck, etc.)

Step 2: Obtain a Business Permit

To apply at the MVD for a South Dakota dealer license, the business must be registered as an entity. To do so, the applicant must:

  • Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS)
  • Register with the state’s Division of Business Services
  • Get a local city/county business license (if applicable)

Step 3: Establish Business Location 

Part of the requirements to obtain licensure is that the dealer must have an established place of business. While it can be either bought or leased, the location must meet the following requirements:

  • Be an enclosed structure located in South Dakota
  • Earn a zoning approval letter from the city or county in South Dakota
  • Be easily accessible and open to the public at all reasonable times
  • Have its hours of operation posted in an easy-to-view area; these hours must include at least 20 hours per week between 8 a.m. and 8 p.m.
  • Maintain a display lot large enough to display at least five motor vehicles
  • Keep an office space that is separate from all other business
    This must be an adequately heated and lighted office that is also used for the storage and maintenance of the books and records required to conduct business
  • Maintain a working telephone number listed in the business’s name
  • Offer a repair shop (for new vehicle dealers)

NOTE: Mobile/manufactured homes dealers must comply with slightly different requirements. All location requirements can be found in the dealer requirements leaflet.

Step 4: Pass an Inspection

A representative from the South Dakota DOR must inspect the dealer’s business location and certify that it complies with all of the minimum requirements before a dealer can be issued a license.

Step 5: Become Insured

Vehicle, used vehicle, and motorcycle dealers must purchase and maintain public liability insurance with a minimum limit of $300,000. Dealers will need to submit proof of insurance with their application.

Step 6: Purchase a Surety Bond

As described above, dealers must buy and maintain a surety bond. The bond, issued by your surety company, must be signed by said company on the surety bond form and submitted with the application. Dealers must purchase and maintain a $5,000, $10,000, $20,000 or $25,000 motor vehicle dealer surety bond to be eligible for licensure. Each bond pertains to the type of business you are running, so it is important to make sure you acquire the correct bond for the right price.

Our team of bond experts works hard to get all of our customers bonded for the best rates possible. If you’re ready to get bonded, call SuretyBonds.com at 1 (800) 308-4358 or fill out our online bond request form.

Step 7: Compile Your Documents and Complete the South Dakota Auto Dealer Application

After all the above information is completed, applicants can finish the process by completing the South Dakota dealer license application, including the dealer license plate application form. New and used vehicle dealers must obtain “77” South Dakota dealer plates. These allow any and all cars owned by the dealer to be driven in the state of South Dakota.

Dealers must complete the dealer application, which requires that the following documents be accessed.

  • 7a. Lease – Dealers who lease their business location must submit a copy of their lease with their application
  • 7b. Franchise Agreement (if applicable) – Dealers who sell new motor vehicles must submit a copy of their franchise agreement with their application, authorizing them to sell each make and model of new motor vehicle

After compiling the above documents, auto dealer applicants may proceed with mailing your application packet to the MVD, and paying the necessary fees. The fees are as follows:

  • $300 for vehicle, used vehicle, emergency, and mobile/manufactured home dealers
  • $250 for motorcycle and boat dealers
  • $150 for snowmobile dealers
  • $125 for trailer dealers

NOTE: You must also pay a fee for the dealer plates you have ordered. This fee will depend on the number of plates you wish to receive. Plate fees for the different dealer types are specified on the application form.

All dealer license materials and fees, once compiled, should be mailed to:

State of South Dakota
Motor Vehicle Division
445 E. Capitol Avenue
Pierre, SD 57501

When do I need to renew my South Dakota auto dealer license?

The South Dakota dealer license is valid for five years; however, dealers will have to submit a renewal application and pay a renewal fee each year. Once the MVD of South Dakota has set an expiration date, it may continue until canceled.  

Dealers will be mailed a renewal notice three months prior to their license expiration date. Dealers should bring the completed renewal notice and the required renewal fees to their local county treasurer’s office.

If you have any questions about the licensing or renewal process for South Dakota dealers, contact the Dealer Licensing Office at (605) 882-5192 or [email protected].

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