IOWA
IOWA MOTOR VEHICLE DEALER
Iowa Motor Vehicle Dealer Bond
Getting a Iowa 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 Iowa.
Surety Bond Name: Iowa Motor Vehicle Dealer Bond
Surety Bond Amount: $75,000
Obligee: The Iowa
Department of Transportation
Just like all surety bonds, the Iowa 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.
Iowa Motor Vehicle / Auto Dealer Bond Cost
While $75,000 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 Iowa 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%.
Iowa Motor Vehicle / Auto Dealer License and Renewal
🧾 Who Needs a Dealer License in Iowa?
You must obtain a dealer’s license from the Iowa Department of Transportation (DOT) if you engage in or advertise the sale of vehicles to the public — including:
Acquiring, selling, exchanging, displaying, or brokering vehicles
Acting as an agent in the sale process
Accepting vehicles on consignment or conducting retail auctions
🔹 Selling more than 6 vehicles in 12 months = presumed to be “engaged in the business”
🏢 Place of Business Requirements
To qualify, your dealership must meet specific business facility requirements, including:
Office Space:
With a landline telephone in the dealership name
Open at least 32 hours per week, Monday–FridayRepair Facility:
Fully enclosed space separated from display/office
Min. space: 14’ x 24’ for regular vehicles or 10’ x 15’ for motorcyclesDisplay Area:
Indoor or outdoor all-weather surface (no grass/dirt)
Min. space: 18’ x 30’ for vehicles, 10’ x 15’ for motorcycles
📄 Required Documentation
Before applying, gather and submit:
✔️ Application for Motor Vehicle or Towable RV Dealer License
💲 Fees (see DOT’s fee schedule)
🔏 Surety Bond:$75,000 required
Must be issued by an Iowa-licensed bonding company🏢 Zoning Letter: Shows your location meets local zoning laws
🤝 Franchise Agreement (for new vehicle dealers only)
👀 On-Site Inspection scheduled through the Iowa DOT
🎓 Education Requirement (for used vehicle dealers)
8-hour pre-licensing class via IIADA
💼 Dealer Insurance Requirements
Iowa dealers must carry financial liability coverage with at least:
🪪 Other License Types
Restricted Dealer License - For repossessions, lease returns, fleet sales, insurer sales, etc.
Leasing License - Required if leasing vehicles for more than 60 days
🔹 Restricted dealers must have a business address in Iowa but do not need full facilities (e.g., office or display lot).
🔹 Dealer plates are not issued to restricted licensees.
💵 Bond Types
Motor Vehicle Dealer (All Types) - $75,000
Restricted Dealer License - $75,000
Leasing License (if selling vehicles) - $75,000
🔁 Renewal & Compliance
Licenses must be renewed before expiration
Dealers are subject to random audits by the Iowa DOT
Selling over 6 vehicles without a license may lead to criminal charges (curbstoning)
What Is a Iowa Auto Dealer Bond?
What the Iowa Dealer Bond Does:
Ensures compliance with state laws and ethical business practices.
Protects customers and the state from fraud or misrepresentation.
👉 Need a Iowa Surety Bond? Get your free quote now!
Need Help with Iowa Garage Liability Insurance?
At All American Bonds and Insurance, we specialize in insuring licensed auto and powersports dealers in Iowa. Whether you're starting your first dealership or expanding operations, we’ll help you choose the right protection at a competitive rate.
✅ Fast quotes
✅ Low down payments
✅ Coverage that meets dealer board and lender requirements
📞 Call us at (844) 321-2663 or Get a Quote Now!
📦 Get Everything in One Place
We make the process easy for Iowa car dealers. We can help you:
✅ Get your Surety Bond
✅ Secure Garage Liability Insurance
✅ Understand Licensing Requirements
✅ Stay MVD Compliant Year-Round
Whether applying for your first auto dealer license in Iowa, 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 Iowa 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.
Common Bond Types: (Many others are available)
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