Who needs Maryland Auto Dealer Bonds?
Anyone applying for or renewing a Maryland motor vehicle dealer license must file an auto dealer bond with the Maryland Motor Vehicle Administration (MVA). This includes both new and used vehicle dealers, as well as certain trailer dealers, depending on the license type.
The bond is required before your dealer license can be approved. The required bond amount is set by the MVA based on your dealer classification and the number of vehicles sold in the previous year.
This bond protects customers, creditors, and the state. If a dealer violates Maryland regulations, engages in fraud, or causes financial harm, a claim can be filed against the bond. If a valid claim is paid, the dealer is responsible for repaying the bonding company.
How much do Maryland Auto Dealer Bonds cost?
The cost of a Maryland auto dealer bond depends on the bond amount required by the MVA and your financial profile.
The state sets bond amounts between $15,000 and $300,000 based on your license type and prior-year sales volume. You do not pay the full bond amount. Instead, you pay a yearly premium, which is typically between 1% and 3% of the required bond amount.
Applicants with strong credit and financial history usually qualify for lower rates, while those with credit challenges may pay a higher percentage.
How do I get a Maryland Auto Dealer Bond?
Getting your Maryland auto dealer bond is a straightforward process:
First, complete a short bond application. You will provide basic business information and consent to a credit review.
Next, the bonding company reviews your credit, financial background, industry experience, and licensing history to determine your rate.
Once approved and payment is made, the bond is issued so you can file it with the Maryland MVA as part of your dealer license application or renewal.
You will need this bond along with other licensing requirements, which may include:
- Submitting the dealer license application
- Obtaining zoning approval
- Registering your business with the Department of Assessment and Taxation
- Completing a dealer site inspection
- Providing an Electronic Registration and Titling (ERT) contract
- Completing a background check
- Providing proof of workers’ compensation insurance
- Submitting a trader’s license and use and occupancy permit
- Providing franchise approval and certification forms if selling new vehicles
The MVA reviews your full application package before issuing your license.
Can I get a Maryland Auto Dealer Bond with bad credit?
Yes, many dealers are still able to obtain a Maryland auto dealer bond with less-than-perfect credit.
Your credit score is one of several factors reviewed during underwriting. While lower credit may result in a higher premium, it does not automatically prevent you from qualifying for a bond.
Bonding companies work with a wide range of credit profiles and will typically provide options based on your individual situation.
How fast can I get Maryland Auto Dealer Bonds?
In many cases, Maryland auto dealer bonds can be approved the same day, depending on the complexity of the application and how quickly information is provided.
Simple applications with strong credit are often processed quickly. More complex situations may require additional review time. Once approved and payment is received, the bond can be issued so you can move forward with your MVA licensing process.
Are there any local requirements?
Yes. In addition to the statewide bond requirement, the Maryland MVA requires dealers to meet local zoning and occupancy rules before a license is granted.
You must obtain zoning approval for your business location and pass a dealer site inspection. You may also need a use and occupancy permit and must meet local business registration requirements before the state will issue your license.
If you’re unsure which bond you need, BOSS Bonds can review your licensing paperwork and help identify the correct bond at no cost.
