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Alabama Motor Vehicle Dealer Bond

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Getting a Alabama motor vehicle dealer bond is a key step to becoming a licensed car dealer in the state. The motor vehicle dealer bond serves as an extra guarantee that your dealership will follow all rules and regulations that govern motor vehicle dealers in the state of Alabama.

Just like all surety bonds, the Alabama motor vehicle dealer bond serves as protection for the general public, and not as insurance for your business. In case you don't follow the rules and your obligations under the bond, a claim can be made against you. If proven to be a legitimate claim, the penal sum of the bond is used to compensate the affected parties. The surety covers the costs of claims up front, which you’ll be required to reimburse in full. This means you should avoided having any claims, as they can cause serious harm to your business and finances.


Alabama Motor Vehicle / Auto Dealer Bond Cost

While $50,000 might seem like a large amount to pay, in reality, you only need to pay a percentage of it to get bonded, which is called the bond annual premium. The surety company will look at several factors to determine your Alabama motor vehicle dealer bond cost, most importantly, your credit score. Factors such as years licensed and years of industry experience will also play a factor in your dealer bond cost.

  • If your credit score is above 650, you’ll likely have to pay between .75% and 2% of the bond amount.

  • For applicants with credit scores between 600 and 649, the rates range between 2.5% and 4%.

Alabama Motor Vehicle / Auto Dealer License and Renewal

Who is required to be licensed?

All new and used motor vehicle dealers, including motorcycle and trailer dealers (excluding trailers not subject to titling), wholesale dealers and rebuilders.

What are the dealer license fees?

  • Master Dealer License: $125

  • Each additional place of business: $ 5

  • Off-site sales license: $25

  • Master Off-site Sales License: $25

A facilitator of an off-site sale is required to obtain a master off-site sales license. The facilitator will be required to verify the off-site license of participating dealers.  The facilitator must list each participating dealer’s off-site sale license number on the application.  If the dealer and facilitator are the same entity, only the master off-site sales event license is required.

What are the bonding requirements?

  • All licensees are required to submit a continuous bond in the amount of $50,000 to ALDOR.

  • All dealers are required by law to become designated agents of the department. The dealer bond also satisfies the designated agent bonding requirement.

What are the insurance requirements?

Each dealer must maintain blanket liability insurance coverage for all vehicles owned or associated with the business. Minimum insurance limits are:

  • $25,000 bodily injury/person/accident

  • $50,000 combined bodily injury/accident

  • $25,000 property damage/accident or a combined single limit of $75,000/accident

Hassle Free Guarantee Dealer Bond

Whether applying for your first auto dealer license in Alabama, or renewing an existing one, you have to submit a dealer application form, together with all necessary documents that prove you meet the requirements.

When you renew your license, you’ll have to renew your Alabama auto dealer bond as well. As your business finances and personal credit score can change, make sure you work on improving those stats, so that you can reduce your surety bond cost over the years.

Request a FREE Bond or Insurance Quote today!


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