Michigan 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 Michigan 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%.

Michigan Motor Vehicle / Auto Dealer License and Renewal

Who Needs a Michigan Motor Vehicle Dealer Bond?

Under Colorado law, the following license types are required to file a $25,000 Surety Bond with the Michigan Department of State:

• Class A – New Vehicle Dealer - Sell new or used motor vehicles (requires franchise agreement for new vehicles).

• Class B – Used Vehicle Dealer - Sell used motor vehicles only.

• Class D – Broker - Connect buyers and sellers of vehicles.

• Class H – Foreign Salvage Vehicle Dealer - Licensed outside Michigan, selling vehicle parts wholesale.

Michigan requires Class A, B, D, and H dealers to carry a $25,000 Motor Vehicle Dealer Bond.
This bond protects customers from fraudulent or unethical dealer practices.

✅ Bond Amount: $25,000
Get a bond quote now!

What Is a Michigan Auto Dealer Bond?

A Motor Vehicle Dealer Bond is a type of surety bond required by the Michigan Department of State. It ensures that dealers comply with all applicable laws and protects consumers from fraudulent or unethical business practices.

This is not insurance for you—it's protection for your customers and the State of Michigan. However, you're the one responsible for obtaining the bond as part of your dealer license application.

How to Apply for a Michigan Motor Vehicle Dealer License

To be licensed as a dealer or wholesaler in Michigan, applicants must complete the following:

Step 1 – Determine Your License Type

• Class A – New Vehicle Dealer - Sell new or used motor vehicles (requires franchise agreement for new vehicles).

• Class B – Used Vehicle Dealer - Sell used motor vehicles only.

• Class C – Used Vehicle Parts Dealer - Sell parts from used motor vehicles.

• Class D – Broker - Connect buyers and sellers of vehicles.

• Class E – Distressed Vehicle Transporter - Buy, sell, or transport distressed vehicles to Class C, F, or R dealers.

• Class F – Vehicle Scrap Metal Processor - Process vehicles into scrap metal.

• Class G – Vehicle Salvage Pool - Hold and display distressed vehicles for insurance companies.

• Class H – Foreign Salvage Vehicle Dealer - Licensed outside Michigan, selling vehicle parts wholesale.

• Class R – Automotive Recycler - Sell late-model major component parts.

• Class W – Wholesaler - Sell used vehicles to other licensed dealers.

Step 2 – Establish a Business Location

Your dealership must meet strict state location requirements:

• Enclosed commercial-use building

• Office of at least 150 sq. ft. with restroom

• Well-lit display lot for at least 10 vehicles (1,300 sq. ft. minimum)

• 650 sq. ft. of customer parking

• Posted business hours

• Telephone listed in the dealership name

• On-site repair facility or agreement with one within 10 miles

Step 3 – Erect a Business Sign

A permanent, clearly visible sign displaying your business name must be installed before applying for your license.

Step 4 – Zoning Approval

You must obtain written zoning approval from your local municipality confirming your dealership complies with local regulations.

Step 5 – Complete Dealer Training

Class A and Class B dealer applicants must complete a state-approved pre-licensing training course before submitting an application.

Step 6 – Purchase a Surety Bond

Michigan requires Class A, B, D, and H dealers to carry a $25,000 Motor Vehicle Dealer Bond.
This bond protects customers from fraudulent or unethical dealer practices.

Step 7 – Obtain Required Insurance

Class A and B dealers must carry no-fault fleet insurance with minimum coverage limits of 20/40/10:

• $20,000 – bodily injury per person

• $40,000 – bodily injury per accident

• $10,000 – property damage per accident

Class C and Class R dealers must obtain workers’ compensation insurance.

Step 8 – Complete the Application

Submit your application packet to:

Michigan Department of State

The packet must include:

• Fingerprints

• Municipal approval form

• Sales tax number

• Franchise agreement (Class A)

• Servicing facility agreement (if applicable)

• Dealer plate request

• $75 application fee + $10 per dealer plate

Step 9 – Pass Inspection

A state inspector will visit your dealership location to ensure it meets all licensing requirements before issuing your license.

How to Renew a Michigan Dealer License

• Renew online or by mail before December 31 each year

• Bond coverage continues year-to-year but must remain active

• Failure to renew on time may result in late fees or license suspension

Additional Recommended Insurance Coverage

Beyond the required no-fault fleet or workers’ compensation insurance, Michigan dealers often benefit from:

• Garage Liability Insurance – Covers liability for accidents or damage involving dealership operations.

• Garagekeepers Insurance – Protects customers’ vehicles while in your care.

• Dealer’s Open Lot Insurance – Covers inventory vehicles against theft, vandalism, or weather damage.

Need Help with Liability Insurance?

At All American Bonds and Insurance, we specialize in insuring licensed auto and powersports dealers in Michigan. 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!

Start Your Michigan Dealer License Application Today

If you’re ready to open your dealership in Michigan, ensure you follow all licensing steps, secure your $25,000 surety bond, and meet insurance requirements. Taking the time to prepare properly will help you pass your inspection and begin selling vehicles legally and confidently.