Iowa Motor Vehicle Dealer Surety Bond
An Iowa motor vehicle dealer surety bond is a required license bond for any person or business engaged in the sale of motor vehicles or towable recreational vehicles within the State of Iowa. The Iowa Department of Transportation (Iowa DOT), Office of Vehicle & Motor Carrier Services requires all dealer license applicants to post a $75,000 surety bond as part of the licensing process. At $75,000, Iowa has one of the highest uniform bond amounts in the country. Surety One, Inc. offers quick, no-hassle underwriting for Iowa motor vehicle dealer bonds, including options for new applicants and those with challenged credit.
Bond Amount & Requirements
Iowa Code Chapter 322, Section 4 requires all motor vehicle dealer and towable recreational vehicle dealer license applicants to file a surety bond. The bond must be executed by the applicant as principal and by a corporate surety company licensed to do business in Iowa, and must run to the state. The bond protects all purchasers, sellers, financing agencies, and government agencies from monetary loss stemming from fraud, fraudulent representation, failure to comply with licensing law, and failure to pay required taxes and fees.
| Bond Amount | License Type | Description |
|---|---|---|
| $75,000 | Retail Motor Vehicle Dealer | Sells new or used motor vehicles to the public (most common) |
| $75,000 | Wholesale Motor Vehicle Dealer | Sells motor vehicles exclusively to other licensed dealers |
| $75,000 | Towable Recreational Vehicle Dealer | Sells towable RVs (travel trailers, fifth wheels, camping trailers) |
| $75,000 | Motor Vehicle Rebuilder | Rebuilds salvage vehicles for resale |
Important — Towable RV Bond Increase: Iowa House File 391 raised the surety bond requirement for towable recreational vehicle dealers from $25,000 to $75,000, effective July 1, 2019. The towable RV dealer bond is now the same $75,000 as motor vehicle dealers. If a dealer already has a $75,000 motor vehicle dealer bond on file with the Iowa DOT, a separate towable RV bond is not required.
Who Needs This Bond?
Iowa law requires a dealer license for any person who is “engaged in the business” of selling motor vehicles to the public. A person selling more than six (6) motor vehicles during a 12-month period may be presumed to be engaged in the business and required to obtain a license. Banks and credit unions are exempt when selling repossessed vehicles.
- Retail motor vehicle dealers (new and used)
- Wholesale motor vehicle dealers
- Towable recreational vehicle dealers
- Motor vehicle rebuilders
A separate dealer license is required for each county in which business is conducted. Extension lot licenses are required for additional sales lots within the same county.
How Much Does the Bond Cost?
The cost of an Iowa motor vehicle dealer surety bond (the “premium”) is a small percentage of the $75,000 bond amount. Your exact premium is determined by underwriting factors including your personal credit score, business financial strength, industry experience, and claims history. Surety One, Inc. offers competitive rates for all credit profiles. Quoting is free of charge with no obligation to purchase.
Iowa Dealer License Requirements
In addition to the $75,000 surety bond, the Iowa DOT requires the following for a dealer license:
- Completed dealer license application (IOWADOT Form 417064 for the bond)
- Eight-hour Auto Dealer Pre-Licensing Education Class through the Iowa Independent Automobile Dealers Association (IIADA) — at least one owner, principal, officer, director, or member must complete the course
- An established place of business: a permanent, enclosed commercial building easily accessible and open to the public, with a display lot for vehicles
- Zoning letter from the local zoning enforcement office confirming compliance with all applicable zoning provisions
- Financial liability insurance on all vehicles with dealer plates
- Copy of franchise agreement for each new vehicle line (new/franchise dealers only)
- On-site inspection by the Iowa DOT Bureau of Investigation & Identity Protection prior to licensing
- Applicable licensing fees
Restricted Dealers: A restricted dealer license does not require a full “place of business” as defined in Iowa Code Chapter 322, but the dealer must have a business location in Iowa. Dealer plates and extension lot licenses are not available to restricted dealers.
Filing, Renewal & Cancellation
The $75,000 surety bond must be filed with the Iowa DOT Office of Vehicle & Motor Carrier Services. Iowa dealer licenses expire on December 31st of each even-numbered year (e.g., 2024, 2026, 2028), making this a biennial cycle. The bond premium is payable annually even though the license is biennial.
The Iowa DOT Bureau of Investigation & Identity Protection conducts random audits on licensed dealers and recyclers to ensure compliance. Title paperwork, disclosures, and receipts for current inventory and prior sales are reviewed. Violations can result in warnings, administrative action, and/or criminal charges.
Bond Claims
A claim against the Iowa motor vehicle dealer surety bond may be filed by any purchaser, seller, financing agency, or government agency that suffers monetary loss due to the dealer’s fraud, fraudulent representation, failure to comply with licensing law, or failure to pay required taxes and fees. Common prohibited acts include misleading advertising, odometer tampering, failure to deliver title, and failure to remit taxes. The surety will pay valid claims up to the $75,000 bond amount, and the dealer must reimburse the surety.
Iowa Department of Transportation
Office of Vehicle & Motor Carrier Services
P.O. Box 9278
Des Moines, IA 50306-9278
Phone: (515) 237-3156
Email: vehicledealer@iowadot.us
Web: iowadot.gov/dealerships
Surety One, Inc. is the Iowa surety bond expert provider, licensed in all fifty states, U.S. territories, and Canada. We offer competitive rates and excellent customer service for Iowa motor vehicle dealer bonds and all other license bond classes. Need help meeting your Iowa DOT 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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