Alabama Motor Vehicle Dealer Surety Bond
An Alabama motor vehicle dealer surety bond is a required license bond for any person or business engaged in the sale of motor vehicles within the State of Alabama. The Alabama Department of Revenue (ALDOR), Motor Vehicle Division requires all dealer license applicants to post a $50,000 surety bond as part of the licensing process. The bond was recently increased from $25,000 to $50,000 to provide greater consumer protection. Surety One, Inc. offers quick, no-hassle underwriting for Alabama motor vehicle dealer bonds, including options for new applicants and those with challenged credit.
Bond Amount & Requirements
Code of Alabama 1975, Sections 40-12-390 through 40-12-400 and Sections 40-12-445 through 40-12-450 require all motor vehicle dealer license applicants to file a surety bond. The bond must be filed using ALDOR Form MVT 4-3 (Motor Vehicle Surety Bond). The bond is payable to the Commissioner of Revenue and is for the benefit of any person who suffers loss as a result of any violation of the conditions pertaining to the dealer’s license. Tax liability incurred under Chapter 23 of Title 40 may also be assessed against the bond.
| Bond Amount | License Type | Description |
|---|---|---|
| $50,000 | New Motor Vehicle Dealer | Sells new and used motor vehicles under a manufacturer franchise |
| $50,000 | Used Motor Vehicle Dealer | Sells used motor vehicles to the public |
| $50,000 | Motor Vehicle Wholesaler | Sells motor vehicles exclusively to other licensed dealers |
| $50,000 | Motor Vehicle Rebuilder | Rebuilds salvage or damaged motor vehicles for resale |
| $50,000 | Motorcycle Dealer | Sells motorcycles to the public (new and/or used) |
| $50,000 | Trailer Dealer | Sells trailers subject to titling requirements |
| $50,000 | Designated Agent | Processes title and registration transactions on behalf of ALDOR |
| $50,000 | Master Dealer License | Consolidated license covering one or more of the above categories |
Important — Dual Coverage: Alabama’s motor vehicle dealer surety bond also satisfies the Designated Agent bonding requirement. All licensed dealers in Alabama must be designated agents of the ALDOR. If you hold a dealer license with the required $50,000 bond, you do not need to purchase a separate Designated Agent bond — one bond covers both requirements.
Who Needs This Bond?
Alabama law requires any person or corporation in the business of selling motor vehicles to first obtain a license, a state sales tax number, and a surety bond. If you intend to sell five (5) or more new or used vehicles within a 12-month period, you must obtain a bond before making your first sale.
The bond is required for:
- New (franchise) motor vehicle dealers
- Used motor vehicle dealers
- Motor vehicle wholesalers
- Motor vehicle rebuilders
- Motorcycle dealers
- Trailer dealers (trailers subject to titling)
- Designated agents
- Automotive dismantlers and parts recyclers
- Wholesale auction dealers
- Manufacturers and boat dealers
- Title service providers
How Much Does the Bond Cost?
The cost of an Alabama motor vehicle dealer surety bond (the “premium”) is a small percentage of the $50,000 bond amount. Your exact premium is determined by a number of underwriting factors including your personal credit score, business financial strength, industry experience, and claims history. Because each applicant’s profile is unique, premiums vary and are quoted on an individual basis.
Surety One, Inc. offers competitive rates for all credit profiles, including programs for applicants with challenged credit. Surety bond application review and quoting are free of charge. There is no obligation to purchase. Contact us for your personalized quote.
Alabama Dealer License Requirements
In addition to the surety bond, the Alabama Department of Revenue requires the following for a dealer license:
- Completed online dealer license application via the MyDMV / Alabama Partner Registration portal
- A permanent business location with photographs of signage and lot (new and used dealers)
- Blanket liability insurance coverage on all vehicles with minimum limits of $25,000 bodily injury per person/accident, $50,000 combined bodily injury per accident, and $25,000 property damage per accident (or $75,000 combined single limit)
- Insurance Certification Form MVD-1
- State sales tax number issued by ALDOR
- Copies of driver’s licenses or non-driver ID for all owners, partners, members, officers, and directors
- Verifiable telephone listing
- Applicable license fees (vary by city population)
- County privilege license (obtained after state license issuance)
Filing, Renewal & Cancellation
All dealer license applications must be submitted electronically through the Alabama Partner Registration system in MyDMV. Upon submission, a transmittal sheet listing required supporting documents will be provided. The original surety bond must be submitted to the Motor Vehicle Division.
Alabama dealer licenses and bonds renew on an October 1st annual cycle, with renewal due by October 31st each year. The bond itself is continuous — it remains in effect until formally canceled. The surety may be released and discharged from liability by filing a written request with ALDOR, but the release does not take effect until 60 days after filing. Any liability accrued before the 60-day period remains enforceable. If a bond lapses without replacement, the dealer license will be suspended.
Bond Claims
A claim against the Alabama motor vehicle dealer surety bond may be filed by any person who suffers loss as a result of a violation of the conditions pertaining to the dealer’s license. The bond also covers tax liability under Chapter 23 of Title 40 and penalty provisions of the statutes through which the dealer is licensed. Common claim triggers include selling vehicles without clear title, failure to remit sales taxes, curbstoning (acting as a private seller to avoid dealer obligations), odometer fraud, and failure to comply with any contract regarding the sale or exchange of a vehicle.
Alabama Department of Revenue
Motor Vehicle Division
P.O. Box 327640
Montgomery, AL 36132-7640
Phone: (334) 242-4368
Online: MyDMV (MyAlabamaTaxes)
Web: revenue.alabama.gov/motor-vehicle
Surety One, Inc. is the Alabama surety bond expert provider, licensed in all fifty states, U.S. territories, and Canada. We offer competitive rates and excellent customer service for Alabama motor vehicle dealer bonds and all other license bond classes. Need help meeting your ALDOR licensing requirements? Call us at (800) 373-2804, email us at Underwriting@SuretyOne.com, or click here to chat with a live underwriter (no bots!) for immediate assistance. We’re here to support your business success.
Surety bond application review and quoting are free of charge. There is no obligation to purchase.
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