Arizona Auto Dealer Bond

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Arizona Auto Dealer Bond: A Comprehensive Guide

This guide provides information for insurance agents to help new and pre-owned car dealership owners on Arizona Auto Dealer bonds

At a Glance:

  • Lowest Cost: $160 per year or $16 per month
  • Bond Amount:
    • $100,000 for new or used vehicle dealers
    • $25,000 for wholesalers
    • $20,000 for recyclers
  • Who Needs It: All individuals and businesses that sell or deal in motor vehicles
  • Purpose: To ensure the public will receive compensation for any damages should the auto dealer fail to comply with dealer licensing law
  • Who Regulates Dealers in Arizona: The Arizona Department of Transportation (DOT), Motor Vehicle Division
Arizona auto dealer bond
Arizona Vehicle Dealer Bond Form


Arizona Revised Statute 28-4533 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the DOT. The Arizona legislature enacted the license and regulations to ensure that dealers engage in ethical business practices and remit required taxes and fees. In order to provide financial security for the enforcement of the license law, dealers must purchase and maintain either a $100,000, $25,000 or $20,000 motor vehicle dealer surety bond.

What is the Purpose of the Arizona Auto Dealer Bond?

Arizona requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for licensure. The bond protects all purchasers, sellers, financing agencies, and government agencies from monetary loss stemming from the dealers failure to remit title, registration or other related taxes or fees or the failure to deliver a title to the purchaser free and clear of liens.

How Can an Insurance Agent Obtain an Arizona Auto Dealer Bond?

BondExchange makes obtaining an Arizona Auto Dealer Bond easy. Simply login to your account and use our keyword search to find the “auto dealer” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How Much Does the Arizona Auto Dealer Bond Cost?

The $100,000 Arizona auto dealer bond costs between $675 to $8,000 for a 1 year term or $68 to $800 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500. The chart below offers a quick reference for the approximate bond cost.

$100,000 Arizona Auto Dealer Bond Cost

Credit Score* Bond Cost (1 year) Bond Cost (1 month)
749+ $675 $68
720 – 748 $700 $70
699 – 719 $750 $75
649 – 698 $900 $90
629 – 648 $1,200 $120
619 – 628 $1,800 $180
600 – 618 $2,500 $250
580 – 599 $4,000 $400
570 – 579 $5,000 $500
500 – 569 $8,000 $800

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Arizona Define “Motor Vehicle Dealer”?

Arizona Revised Statute 28-101 defines a motor vehicle dealer as any “person who is engaged in the business of buying, selling or exchanging motor vehicles, trailers or semi trailers and who has an established place of business and has paid fees”.

Arizona Auto Dealer Bond

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How Do Auto Dealers Apply for a License in Arizona?

The process for applying for a motor vehicle dealer license in Arizona is pretty complex, and each license type has its own specific set of requirements. Below are the general guidelines, but dealers should refer to the DOT’s Application Page for details on the process.

License Period – The Arizona dealer license is valid for one year from the date of issuance and must be renewed prior to the expiration date.

Step 1 – Determine the License Type

Arizona requires dealers to obtain specific licenses corresponding to the nature in which the dealer’s business operates. Keep in mind that dealers will need to acquire a license for each type of business they wish to operate. Below are the different types of the Arizona Dealer License.

    • New: Dealers who sell new or used vehicles as a retailer or wholesaler
    • Used: Dealers who solely sell used vehicles as a retailer or wholesaler
    • Consignment Auction: Dealers who sell consignment vehicles at a public auction
    • Wholesale: Dealers who sell vehicles wholesale only
    • Wholesale Auction Dealer: Dealers who act as a clearing house for other dealers
    • Broker: Act as a locator service connecting consumers to dealers. Cannot own the vehicles sold or have an agreement to lead customers to specific dealers
    • Manufacturer/Distributor: Manufactures or distributes vehicles to a franchised dealer. Cannot sell directly to consumer
    • Auto Recycler: Dismantles motor vehicles and sells the parts or accessories

Step 2 – Establish a Location

Dealers are required to establish a permanent place of business that meets the following minimum requirements:

    • All Dealers:
      • Enclosed building/structure that is owned/leased by the dealer listed on the application
      • Display space large enough for two motor vehicles
      • Must be used strictly for business purposes
      • Have business hours in accordance with what is listed on their specific application
    • Used Dealer:
      • May use a trailer as an office if the wheels are removed
    • Wholesale Dealer:
      • May operate in a residential area

Step 3 – Erect a Sign

Dealers are required to erect a permanent sign at their business location that meets the following requirements:

    • Clearly visible from at least 300 feet away
    • State the business name and indicate the business type

Step 4 – Obtain a Background Check

Each applicant or person who owns 20% or more of the business must submit a background and fingerprint check with their application. Dealers can request a fingerprint and background check here. Dealers also will need to submit both the Authorized Presence and Authorization to Release Information forms.

Step 5 – Purchase and File a Surety Bond

Motor vehicle dealers must purchase and file either a $100,000, $25,000, or $20,000 motor vehicle dealer bond.

Step 6 – Complete the Application

All new dealer regulatory license applications and dealer regulatory license renewal applications can be completed online through the DOT’s licensing portal located here. All application forms will be provided to the applicant in the license portal.

    • 6.a Transaction Privilege Tax – Applicants must submit a copy of their Transaction Privilege Tax License. Dealers can apply for a TPT License here.
    • 6.b Authorized Presence – All dealers must submit an Authorized Presence form indicating their presence in the United States is federally authorized. The authorization form can be found here.
    • 6.c Franchise Authorization – Dealers selling new motor vehicles must submit a written franchise agreement with a manufacturer authorizing them to sell each make and model of new motor vehicles.
    • 6.d Articles of Organization – Dealers must submit either their articles of organization, corporation, or partnership agreement
    • 6.e Pictures – Dealers must submit photographs of their physical location that includes the entire business location and sign.
    • 6.f Dealer Plates – Dealers can request dealer plates on their application. Dealer plates expire when the license expires. Note: Recyclers, auction dealers, and brokers are not eligible for dealer plates.

Step 7 – Pay Fees

The following fees are associated with obtaining the dealer license:

    • $15 filing fee
    • $30 background check fee (per applicant)
    • $10 provisional license fee (if applicable)
    • $50 branch office fee (if applicable)
    • $22 application fee for the Department of Public Safety
    • $100 license fee

How Does an Arizona Motor Vehicle Dealer Renew Their License?

The Arizona dealer license is valid for one year from the date of issuance and must be renewed prior to the expiration date. Dealers can renew their license at the DOT’s licensing portal located here.

How Do Arizona Auto Dealers File Their Bond?

The $100,000, $25,000, and $20,000 surety bonds all require signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:

  • Business Type
  • Legal name, phone number and email address of entity/individual(s) buying the bond
  • Physical address where the business will operate
  • Bond amount
  • Surety company’s name, address, email address, phone number and signature
  • Date on which the bond will be executed

Dealers should mail the completed bond form, including the power of attorney, to the following address:

Mail Drop 552M
Dealer Licensing
PO Box 2100
Phoenix AZ 85001-21000

What Can Dealers Do to Avoid Claims Against the Arizona Auto Dealer Bond?

To avoid claims on the Motor Vehicle Dealer Bond, dealers must follow all dealer regulations in the state, including some of the most important issues below that tend to cause claims:

  • Failure to remit title, registration or other related fees and/or taxes to Arizona
  • Failure to deliver a clean title to the purchaser of a vehicle

What Other Insurance Products Can Agents Offer Dealers in Arizona?

Arizona does not require dealers to obtain comprehensive liability insurance on all vehicles with dealer plates. However, most reputable dealers will obtain liability insurance anyway. Bonds are our only business at BondExchange, so we do not issue any form of liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Arizona Motor Vehicle Dealer Customers?

Arizona conveniently provides a public database to search for active motor vehicle dealers in the state. The database can be accessed on the DOT site here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

What Other States Require Auto Dealer Bonds?

All 50 states and the District of Columbia require auto dealers to obtain an Auto Dealer Bond as a prerequisite for licensure. Insurance agents should utilize our Main MVD Page for a detailed analysis of the Auto Dealer Bond requirements nationwide.

Arizona Auto Dealer Bond