Motor Vehicle Dealers - New or New and Used Vehicles

The State of Alabama Motor Vehicle Dealer and Designated Agent Bond is a $50,000 surety bond required for businesses engaged in selling new vehicles or both new and used vehicles in Alabama. This bond serves as a financial guarantee that the dealer will operate in accordance with state laws and regulations governing motor vehicle sales.

Motor vehicle dealers who sell new vehicles or a combination of new and used vehicles must obtain this bond as part of their licensing requirements. The bond amount was increased to $50,000 effective October 1, 2020, under HB 393. Dealers must complete their license application or renewal online through the state system, which generates a partially completed bond form that must be completed by the surety company.

This bond protects the State of Alabama and consumers from financial losses resulting from the dealer's failure to comply with applicable laws, fraudulent practices, or other violations of their licensing requirements. The bond ensures that funds are available to compensate parties who suffer damages due to the dealer's misconduct or non-compliance with state regulations.

The bond has a one-year term and is renewable annually. The state provides the official bond form, which must be properly completed, signed, and sealed by the surety company before submission.