Arkansas Motor Vehicle / Auto Dealer Bond Cost

While $25,000 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 Arkansas 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%.

Arkansas Motor Vehicle / Auto Dealer License and Renewal

Who Needs a Arkansas Motor Vehicle Dealer Bond?

Anyone intending to sell used motor vehicles in Arkansas must be licensed, including:

• Independent used motor vehicle dealers

• Dealership owners

• Vehicle salespeople

What Is a Arkansas Auto Dealer Bond?

A Arkansas motor vehicle dealer bond is a type of surety bond required by the Arkansas State Police to ensure that licensed dealers operate ethically and in accordance with state laws. It protects consumers and the state from fraudulent or unlawful actions by a dealer.

Purpose of the Bond

The bond guarantees:

• Compliance with the provisions of Act 490 of 1993 and related laws

• Financial protection for consumers who suffer losses due to dealer misconduct

• Payment of any fines or penalties imposed by the State Police

If a claim is made against your bond (for example, for fraud or unpaid judgments), you are still financially responsible for reimbursing the bonding company.

When Must the Bond Be in Force?

Per Rule 2.7:

"The Bond and Insurance requirement(s), as outlined under the provisions of the “Act” shall be in force at all times while holding a certificate of license. Failure...shall result in the certificate of license being summarily suspended...until said Bond and Insurance is submitted and shown to be in full force."

This means:

• No bond = No valid license

• Suspension remains until the bond is reinstated

Arkansas Dealer License Requirements

To qualify, you must:

• Submit a properly completed application

• Pass a background check

• Provide proof of liability insurance and a surety bond

• Ensure your business has a physical address and working phone number

• Notify the Department of any changes in address, contact info, or ownership within 7 days

• Use your AR/DLR number in all published advertisements

Failure to meet insurance or bond requirements may result in summary suspension of your license.

📅 License Maintenance

• Licenses must be renewed annually.

• If you fail to renew on time, you must submit a sworn affidavit affirming no rule violations.

• If your license is suspended, you may not operate until it is officially reinstated.

🚨 Violations & Penalties

Violations of Act 490 or these rules may result in:

• Fines up to $1,000 per violation

• Criminal charges

• License suspension or revocation

Reasons for denial, suspension, or revocation include:

• Fraud or deceit on your application

• Incompetence or untrustworthiness

• Violating any part of Act 490 or its rules

⚖️ Hearing & Appeal Rights

If your application is denied or your license is suspended:

• You will receive written notice and can appeal within 14 days

• Hearings will be conducted by a hearing officer designated by the Director

• Decisions will be issued in writing and include findings of fact and law

♻️ Reciprocal, Temporary & Expedited Licenses

You may qualify for faster or alternative licensing if:

• You hold a dealer license in another state (reciprocal license)

• You meet eligibility for a temporary 6-month license

• You are a military member, veteran, or qualifying spouse, in which case you may request expedited processing

To apply for these, you must submit all required documents, note your status, and include applicable fees.

💰 Fee Waivers Available

Initial license application fees can be waived if you:

• Are receiving aid from programs like Medicaid, SNAP, WIC, TANF, or Lifeline

• Were approved for unemployment in the last 12 months

• Have income under 200% of federal poverty guidelines

📝 Application & Definitions

Applicant: A person who has submitted a completed application form.

License: A certificate issued by the Arkansas State Police authorizing business operations under Act 490.

Licensee: An individual or business who holds a valid dealer license.

To apply, you'll need to complete the appropriate application form and provide all required documentation as outlined in the Act.

🧾 Arkansas Dealer License Summary

Becoming a used motor vehicle dealer in Arkansas requires following the state’s strict guidelines—but once licensed, you can operate legally and confidently. Stay compliant by renewing on time, maintaining your bond and insurance, and notifying the Department of changes.

Arkansas Motor Vehicle Dealer Insurance Requirements

Why is Insurance Required?

In addition to a surety bond, every licensed used car dealer in Arkansas must carry liability insurance to protect customers, employees, and the public. This is a mandatory requirement to maintain your license.

Required Coverage

The state requires that you maintain garage liability insurance or a similar policy that provides protection against:

• Bodily injury

• Property damage

• Loss or damage to vehicles on the lot or in your care

This insurance must be:

• Active and in force at all times during your licensure

• Verified by the Arkansas State Police before a license is granted or renewed

Minimum Liability Limits

While Arkansas does not always publish exact minimums, standard garage liability policies typically include:

Coverage TypeTypical Minimum LimitBodily Injury$25,000 per person / $50,000 per accidentProperty Damage$25,000 per accidentGaragekeepers Legal LiabilityVaries depending on vehicle value and storage risk

Note: Higher limits may be recommended or required depending on your dealership's size and risk exposure.

What is Garage Liability Insurance?

Garage liability insurance is a specialty commercial policy designed specifically for businesses that:

• Sell, service, store, or park vehicles

• Allow test drives

• Let employees or customers operate vehicles

This policy combines general liability and auto liability in one plan.

Proof of Insurance

You must provide proof of insurance to the Arkansas State Police as part of your license application or renewal. This usually comes in the form of:

• Certificate of Insurance (COI)

• Policy declarations page

Failure to provide proof can result in:

• Delayed application

• Immediate license suspension (Rule 2.7)

Important Notes:

• Rule 2.7 of the Arkansas State Police rules states that license suspension is automatic if insurance lapses or is not provided.

• Insurance must match the business name and address listed on your dealer application.

• Keep a copy of your certificate in your dealership at all times.

Need Help with Garage Liability Insurance?

At All American Bonds and Insurance, we specialize in insuring licensed auto and powersports dealers in Arkansas. Whether you're starting your first dealership or expanding operations, we’ll help you choose the right protection at a competitive rate.

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📞 Call us at (844) 321-2663 or Get a Quote Now!