Michigan Motor Vehicle Dealer Surety Bond
A Michigan motor vehicle dealer surety bond is a required license bond for any person or business engaged in the buying, selling, brokering, or leasing of motor vehicles within the State of Michigan. Whether you operate as a new vehicle franchise dealer (Class A), a used vehicle dealer (Class B), or a vehicle broker (Class D), the Michigan Department of State, Business Licensing Section (BLS) requires you to post a surety bond as part of the dealer licensing process. Surety One, Inc. offers quick, no-hassle underwriting for Michigan motor vehicle dealer bonds, including options for new applicants and those with challenged credit.
Bond Amount & Requirements
Michigan Vehicle Code Section 257.248 requires a $25,000 uniform vehicle dealer surety bond for Class A, B, and D dealer license applicants. Effective January 23, 2023, the bond amount was increased from $10,000 to $25,000. All new bonds filed after that date must be issued at the new $25,000 amount. Existing licensees on the prior $10,000 bond must submit a bond rider or new bond at the $25,000 level upon their next renewal.
The bond serves as a financial guarantee that the dealer will comply with Michigan state laws and ethical business practices, including timely payment of sales taxes, clear title transfers, and honest disclosure of vehicle condition and history. If a dealer violates these obligations, the surety bond may be used to compensate consumers, financing agencies, and the state for damages. The surety makes indemnification only after a judgment based on fraud, cheating, or misrepresentation is entered in a court of record, or after a final order is issued by the Secretary of State following an administrative hearing.
| Bond Amount | Dealer Classification | Description |
|---|---|---|
| $25,000 | Class A — New Vehicle Dealer | Sell new or used motor vehicles (requires franchise agreement for new vehicles) |
| $25,000 | Class B — Used Vehicle Dealer | Sell used motor vehicles only |
| $25,000 | Class D — Vehicle Broker | Connect buyers and sellers of motor vehicles for a fee |
Note: Class C (Used Vehicle Parts Dealer), Class E (Distressed Vehicle Transporter), Class F (Vehicle Scrap Metal Processor), Class G (Foreign Salvage Vehicle Dealer), Class R (Automotive Recycler), and Class W (Wholesale Dealer) are exempt from the surety bond requirement.
Who Needs This Bond?
Michigan state law mandates that any individual or business that buys, sells, brokers, leases, or otherwise deals in five (5) or more titled vehicles within a 12-month period must be licensed as a vehicle dealer. Additionally, those who purchase, sell, exchange, broker, or deal in salvageable parts of five or more vehicles must also be licensed. The $25,000 uniform vehicle dealer surety bond must be filed with the Michigan Department of State as part of the dealer license application.
The bond is required for:
- New car franchise dealerships (Class A)
- Used car dealerships (Class B)
- Vehicle brokers (Class D)
- Dealers of motor vehicles, trailer coaches, and trailers weighing more than 2,500 lbs
How Much Does the Bond Cost?
The cost of a Michigan motor vehicle dealer surety bond (the "premium") is a percentage of the full $25,000 bond amount. Your exact premium is determined primarily by your personal credit score, along with factors such as business financial strength, industry experience, and claims history. Surety One, Inc. offers competitive rates for all credit profiles.Surety bond application review and quoting are free of charge. There is no obligation to purchase.
Michigan Dealer License Requirements
In addition to the $25,000 surety bond, the Michigan Department of State requires the following for a vehicle dealer license:
- Completed Original Vehicle Dealer License Application
- An established business location (not a residence) with a minimum 150-square-foot office
- A vehicle display lot of at least 1,300 square feet
- Permanent signage visible from the roadway with posted business hours
- Business must be open a minimum of 30 hours per week
- A sales tax number from the Michigan Department of Treasury
- Passing a criminal background check
- Partnerships, corporations, and LLCs must provide formation documents
- DBA/trade names require an Assumed Name filing from the county clerk
- Applicable license fees paid to the Department of State
Filing & Cancellation
Per the Michigan Department of State, the original executed surety bond documentation must be filed with the Business Licensing Section within 30 days of issuance. The state will not accept a copy or faxed document. The bond must be written by a surety company licensed to do business in Michigan and must remain active for the duration of the license period. The dealer license must be renewed annually.
A vehicle dealer bond runs continuously until canceled by the surety. The surety must provide a minimum of 30 days’ written notice to the Michigan Secretary of State before cancellation. Failure to maintain an active bond can result in license suspension or revocation. Operating a dealership without a valid bond is a violation of Michigan law and may result in denial of future license applications, fines, or criminal penalties.
Bond Claims
A claim against the Michigan uniform vehicle dealer surety bond may be filed by consumers, financing agencies, or the state. Claims may be made for monetary losses resulting from fraud, cheating, misrepresentation, or sales tax deficiency. The surety company will investigate each claim and compensate valid claims up to the full $25,000 bond amount. The bonded dealer is then required to reimburse the surety for any amounts paid. The aggregate liability of the surety for all claims shall not exceed the penal sum of the bond.
Michigan Department of State
Business Licensing Section
Richard H. Austin Building
430 W. Allegan, 3rd Floor
Lansing, MI 48918
Phone: (888) 767-6424
Surety One, Inc. is the Michigan surety bond expert provider, licensed in all fifty states, U.S. territories, and Canada. We offer competitive rates and excellent customer service for Michigan motor vehicle dealer bonds and all other license bond classes. Need help meeting your Michigan Department of State 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.
What We Need From You
Obligee's Bond Form
