New Mexico 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 New Mexico 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%.

New Mexico Motor Vehicle / Auto Dealer License and Renewal

Who Needs a New Mexico Motor Vehicle Dealer Bond?

Under New Mexico law, the following license types are required to file a $50,000 Surety Bond with the New Mexico Motor Vehicle Dealer Board:

• Retail Motor Vehicle Dealers ( Used or New)

• Motor Vehicle Distributers

• Motor Vehicle Wholesalers

• Motor Vehicle Brokers

✅ Bond Amount: $50,000

What Is a New Mexico Auto Dealer Bond?

A Motor Vehicle Dealer Bond is a type of surety bond required by the New Mexico Dealer Licensing Bureau. 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 Colorado. However, you're the one responsible for obtaining the bond as part of your dealer license application. 

How to Apply for a New Mexico Motor Vehicle Dealer License

If you plan to sell more than four vehicles in a 12-month period in New Mexico, you are legally required to obtain a Motor Vehicle Dealer License through the New Mexico Dealer Licensing Bureau. This guide will walk you through every step of the application process.

📝 Important: The application must be completed in one session and requires uploading all necessary documents. Incomplete applications will cause delays. The $50 application fee is non-refundable.

📋 Dealer License Application Requirements

Before beginning your application, make sure you have the following:

🔐 Business Identification Numbers

• New Mexico CRS Tax ID

• Federal Tax ID (EIN)

• NM Secretary of State-assigned number (for corporations/LLCs)

🧾 Business Ownership Documents

• Articles of Organization (LLC) or Incorporation

• Individual owner info: driver's license, address, contact details

📍 Location Documents

• Zoning approval document

• Business license

• Lease agreement (minimum 6-month term)

💵 Surety Bond Requirement

• $50,000 New Mexico Motor Vehicle Dealer Bond
  (Required for all license types. Upload your bond certificate with the application.)

👉 Need a bond? Click here to get your NM Dealer Bond quickly

🎓 Pre-Licensing Education

• Required for used/pre-owned dealers
  Obtain from New Mexico Independent Auto Dealers Association (NMIADA)

📝 Additional Documents

• Franchise agreement (for new vehicle dealers)

• Photos/diagrams of:
  Business site and vehicle display area
  Office exterior and interior
  Office equipment
  Signage (must match DBA name)
  Property layout & office layout

Recommended Garage Liability Insurance Coverage for New Mexico Car Dealers

In addition to the required $50,000 New Mexico Motor Vehicle Dealer Bond, all licensed dealers in New Mexico—whether retail, wholesale, or broker—should carry Garage Liability Insurance to protect their business operations. While not always required for licensing, this coverage is highly recommended and often requested by lenders, floorplan companies, landlords, and customers.

Here’s what your garage liability policy should ideally include:

1. Garage Liability Coverage (General Liability + Auto Liability)

Garage Liability Insurance is a hybrid policy that combines aspects of a commercial auto policy and general liability insurance to cover:

• Bodily injury and property damage arising from your business operations

• Test drives, customer vehicles, and vehicles in your care, custody, or control

• Slips and falls on your lot

• Legal defense costs

Recommended Limits:

• $100,000 / $300,000 / $100,000 or higher

• Many lenders and floorplan providers require $1 million liability limits

2. Garagekeepers Insurance

Protects your customers’ vehicles while they are on your premises for:

• Repairs

• Storage

• Test drives
  This is especially important if you operate a repair shop, detail vehicles, or accept customer trade-ins.

Coverage Types:

• Legal Liability (only covers damage if you're found negligent)

• Direct Primary (covers damage regardless of fault — highly recommended)

3. Dealer's Physical Damage / Open Lot

Covers damage to your inventory from:

• Collisions

• Theft

• Vandalism

• Weather events (hail, wind, flood, etc.)

Make sure your inventory value is accurately reported to ensure full protection.

4. False Pretense Coverage

Covers losses when a vehicle is voluntarily turned over to someone under fraudulent pretenses (e.g., bad checks or identity fraud). This is essential for wholesale and retail dealers who sell to unknown buyers.

5. Errors & Omissions (E&O)

Provides coverage for clerical mistakes, title processing errors, or compliance violations. E&O is especially valuable if your dealership handles in-house financing or lien work.

6. Cyber Liability (Optional)

Recommended if you collect customer data (SSNs, driver’s license info, or credit applications). This covers:

• Data breaches

• Ransomware attacks

• Identity theft liability

Need Help with Garage Liability Insurance?

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