Texas Motor Vehicle Dealer Surety Bonds

What are Texas Motor Vehicle Dealer Surety Bonds?

Texas Vehicle Dealer Bonds guarantee the principal (vehicle dealer) complies with all provisions of Title 14, Subtitle A, Chapter 2301 of the Texas Occupations code and the Texas Transportation Code. This also includes the paying of all valid bank drafts, including checks drawn by the principal for the purchase of motor vehicles, and transferring valid titles to each motor vehicle the principal plans to sell.

If the principal engages in unethical or unlawful business practices, a claim can be filed with the surety company. If the claim is valid, the surety will pay up to the penal sum ($50,000) of the bond to resolve the claim. The principal is then responsible to reimburse the surety for all monies paid out, including any attorney fees incurred by the surety.

Why does the Texas Department of Motor Vehicles require a Motor Vehicle Dealer Surety Bond?

Anyone who wishes to conduct business as a motor vehicle dealer in the state of Texas must apply for a license from the Department of Motor Vehicles (DMV). Dealers are required to obtain and submit a $50,000 surety bond as a condition of this licensing (effective 9/1/2021). Current $25,000 bond-holders will need to increase their bond upon renewal.

How much do Texas Motor Vehicle Dealer Surety Bonds cost?

Texas Motor Vehicle Dealer Surety Bonds are subject to underwriting and the price you will pay depends on a review of your personal credit report. Pacific Surety is proud to offer rates starting at $329 with qualifying credit for the two-year term. It typically takes just a few hours from quote to issuance of the bond, and we have the ability to beat any competitors pricing.

Can I get a Texas Motor Vehicle Dealer Surety Bond with bad credit?

Pacific Surety offers a wide range of approvals, regardless of credit, for Texas Motor Vehicle Dealers. Our strong surety relationships help get your price down as low as possible every year. There is no need to shop your rate – we do that for you! If you have any specific questions, feel free to contact our knowledgeable underwriting staff.

What are the terms of Motor Vehicle Dealer Surety Bonds in Texas?

Texas Motor Vehicle Dealer Surety Bonds are filed with the Texas Department of Motor Vehicles and run concurrently with the period of the license issued to the principal. The bond is renewed every 2 years and remains in effect until canceled by the surety company. If it is determined the principal has violated the terms of the bond, the surety will cancel the bond automatically. The aggregate liability of the surety will not exceed the penal sum of the bond in any event.

How do I purchase a Texas Motor Vehicle Dealer Surety Bond?

The first step is to complete our quick online application for your free bond quote. Submission takes only five minutes, and our underwriting staff will be in contact with you within a couple of hours with pricing.

After you receive approval, you must sign an indemnity agreement with the surety and provide payment for your bond premium. In most cases, we can issue bonds the same day we receive your signed documents and payment.

How do I get my Texas Auto Dealer License?

Any person engaging in the buying, selling or exchanging of motor vehicles, including by consignment, must apply for a General Distinguishing Number (GDN) license from the Department of Motor Vehicles. GDN is the basic dealer license and is divided into several categories of dealers based on the type of vehicle sold:

  • Independent Motor Vehicle
  • Independent Motorcycle
  • Travel Trailer
  • Trailer/Semitrailer
  • Wholesale Dealers
  • Wholesale Motor Vehicle Auction
  • Independent Mobility Motor Vehicle Dealer

When applying for a license, you must select one of the independent license types listed on the application. If you wish to have multiple types, you may submit multiple applications. If you are selling new motor vehicles, you must also acquire a franchised dealer license from the DMV. The DMV website has information packets that will guide you through the process of applying and describes all documentation necessary to apply for your license type.


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Motor Vehicle Dealer Surety Bonds – Texas