Colorado Motor Vehicle Dealer Surety Bond
A Colorado motor vehicle dealer surety bond is a required license bond for any person or business engaged in the sale or exchange of motor vehicles within the State of Colorado. The Colorado Department of Revenue (CDOR), Auto Industry Division and the Motor Vehicle Dealer Board require all dealer license applicants to post a $50,000 surety bond. Colorado is also one of the few states that requires a separate $15,000 surety bond for each salesperson employed by the dealership. Surety One, Inc. offers quick, no-hassle underwriting for Colorado motor vehicle dealer bonds and salesperson bonds, including options for new applicants and those with challenged credit.
Bond Amount & Requirements
Colorado Revised Statutes C.R.S. §44-20-102 (formerly §12-6-111) mandates that all motor vehicle dealer license applicants purchase and maintain a surety bond. The bond guarantees that the dealer will have clear title to any vehicle sold and will comply with all applicable laws concerning the sale of motor vehicles in Colorado. The surety is not required to pay any person until a claim is determined by the Motor Vehicle Dealer Board or by a court of competent jurisdiction.
| Bond Amount | License Type | Description |
|---|---|---|
| $50,000 | Motor Vehicle Dealer (New/Franchise) | Sells new and used motor vehicles under a manufacturer franchise agreement |
| $50,000 | Used Motor Vehicle Dealer | Sells used motor vehicles to the public |
| $50,000 | Wholesale Motor Vehicle Dealer | Sells motor vehicles exclusively to other licensed dealers |
| $50,000 | Wholesale Auction Dealer | Conducts wholesale motor vehicle auction sales |
| $50,000 | Powersport Vehicle Dealer (New & Used) | Sells motorcycles, ATVs, and powersport vehicles |
| $50,000 | Recreational Vehicle Dealer | Sells camping trailers, fifth wheels, motor homes, travel trailers, and truck campers |
| $15,000 | Motor Vehicle Salesperson | Individual employed by a dealer to sell, lease, purchase, or exchange motor vehicles |
| $5,000 | Small Trailer Dealer | Sells trailers weighing less than 2,000 pounds |
Important — Salesperson Bond Requirement: Colorado is one of very few states that requires a separate $15,000 surety bond for each motor vehicle salesperson. If the dealer has already procured a Powersports Vehicle Salesperson’s Bond under C.R.S. §12-6-513, the salesperson is not required to furnish an additional bond. This dual-bond requirement is a significant compliance consideration for Colorado dealerships.
Who Needs This Bond?
Under C.R.S. §44-20-102, a Colorado motor vehicle dealer is defined as anyone who sells or deals in motor vehicles in the state. Any individual or business entity that sells, exchanges, or otherwise deals in motor vehicles must obtain a dealer license and post the required surety bond before operating.
The dealer bond is required for:
- New (franchise) motor vehicle dealers
- Used motor vehicle dealers
- Wholesale motor vehicle dealers
- Wholesale auction dealers
- Powersport vehicle dealers (new and used)
- Recreational vehicle dealers
- Small trailer dealers (trailers under 2,000 lbs)
The $15,000 salesperson bond is additionally required for each individual employed by a dealer to sell, lease, purchase, or exchange motor vehicles.
How Much Does the Bond Cost?
The cost of a Colorado motor vehicle dealer surety bond (the “premium”) is a small percentage of the required 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.
Colorado Dealer License Requirements
In addition to the surety bond(s), the Colorado Department of Revenue, Auto Industry Division requires the following for a dealer license:
- Completed Dealer/Wholesaler Application (Form DR 2109) and required addenda
- Minimum net worth of $100,000
- At least one owner or officer must have a credit score of 701 or higher (as required by the Dealer Board)
- Pre-Licensing Education Program completion certificate (new applicants)
- Pass the Mastery Exam and file the DR 2097 Examination Affidavit
- Fingerprinting through IdentoGO with official verification form
- Background investigation for all applicants (persons convicted of a felony within the last 10 years are ineligible)
- Each owner/officer with 5%+ ownership must sign the Addendum Form
- Statement of Financial Condition
- Place of Business Affidavit and Dealer/Wholesaler Plate Affidavit
- Copy of Colorado ID and DR 4679 Affidavit affirming lawful presence
- Business formation documents (articles of incorporation/organization, trade name registration, operating agreement)
- Manufacturer/distributor franchise agreement (franchise dealers only)
- Licensing fee of $455
Filing, Renewal & Cancellation
The executed surety bond must be submitted with the dealer license application to the Auto Industry Division. Applications and bonds can be submitted online through the CDOR Specialized Business Group online system or mailed to the Auto Industry Division. After submission, the AID will review the application and, if approved, the dealer may begin operations.
Colorado dealer licenses and bonds expire annually on the last day of the month the bond was issued. The AID mails renewal packets approximately 30 days before the expiration date. A 30-day grace period is allowed for late renewals, but late fees apply. After the grace period, you must reapply as a new applicant.
Bond Claims
A claim against the Colorado motor vehicle dealer surety bond may be filed by any person who suffers loss due to the dealer’s failure to comply with the Motor Vehicle Dealer Licensing Act. The bond guarantees that the dealer has clear title to any vehicle sold. The surety is not required to pay until the claim is determined by the Motor Vehicle Dealer Board or by a court of competent jurisdiction. The aggregate liability of the surety shall not exceed the face amount of the bond. Common claim triggers include failure to deliver clear title, false advertising, warranty violations, and failure to pay taxes.
Colorado Department of Revenue
Auto Industry Division
1707 Cole Blvd., Suite 300
Lakewood, CO 80401
Mailing: P.O. Box 17087, Denver, CO 80217-0087
Phone: (303) 205-5604
Web: auto.colorado.gov
Surety One, Inc. is the Colorado surety bond expert provider, licensed in all fifty states, U.S. territories, and Canada. We offer competitive rates and excellent customer service for Colorado motor vehicle dealer bonds, salesperson bonds, and all other license bond classes. Need help meeting your Auto Industry Division 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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