Colorado Auto Dealer Bond

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Colorado Auto Dealer Bond: A Comprehensive Guide

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

At a Glance:

  • Lowest Cost: $150 per year or $15 per month
  • Bond Amount: 
    • $50,000 for motor vehicle dealers
    • $15,000 for motor vehicle salespersons
  • 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 Colorado: The Colorado Department of Revenue, Motor Vehicle Dealer Board


C.R.S. 44-20-102 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the Department of Revenue. The Colorado 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 a $50,000 motor vehicle dealer surety bond and a $15,000 salesperson bond for all salespersons employed by the dealer.

What is the Purpose of the Colorado Auto Dealer Bond?

Colorado requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for the Motor Vehicle Dealer License. The bond ensures that the public will receive compensation for financial harm if the auto dealer fails to comply with the licensing regulations and that the dealer will pay all required taxes and fees to the State of Colorado. In short, the bond is a type of insurance that protects the public if the dealer breaks licensing laws.

How Can an Insurance Agent Obtain a Colorado Auto Dealer Bond?

BondExchange makes obtaining a Colorado 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? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, 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 ensure 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 Colorado Auto Dealer Bond Cost?

The $50,000 Colorado Motor Vehicle Dealer surety bond can cost anywhere between $250 to $3,500 per year or $25 to $350 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We offer the financing option “in-house”, so your customer doesn’t have to deal with pesky 3rd party financing with high-interest rates and lengthy paperwork! The chart below offers a quick reference for the approximate bond cost on the $50,000 bond requirement.

$50,000 Colorado Auto Dealer Bond Cost

Credit Score* Bond Cost (1 year) Bond Cost (1 month)
700+ $250 $25
660 – 699 $300 $30
626 – 659 $375 $38
619 – 625 $750 $75
600 – 618 $1,000 $100
580 – 599 $1,500 $150
570 – 579 $2,500 $250
550 – 569 $3,000 $300
500 – 549 $3,500 $350

*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 Colorado Define “Motor Vehicle Dealer”?

To paraphrase C.R.S. 44-20-102(22), a Colorado motor vehicle dealer is anyone who sells or deals in motor vehicles in the state of Colorado.

Colorado 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 Colorado?

The process for applying for a motor vehicle dealer license in Colorado is pretty complex. Below are the general guidelines, but dealers should refer to the Dealer/Wholesaler checklist for details on the process.

License Period – The Colorado dealer license expires June 30 each year regardless of the date of issuance and must be renewed before the expiration date.

Step 1 – Meet the Minimum Requirements

Colorado requires all licensed dealers to have a minimum net worth of $100,000 and a credit/vantage score of at least 701. Applicants must meet these minimum requirements to be eligible for licensure.

Step 2 – Determine the License Type

Colorado 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 Colorado dealer licenses.

    • Franchised Dealer – Sells new or used motor vehicles
    • Used Dealer – Sells used motor vehicles only
    • Wholesaler – Sells motor vehicles to other licensed dealers
    • Wholesale Auction – Sells motor vehicles to other licensed dealers at an auction
    • Franchised Powersport – Sells new or used power sport motor vehicles
    • Used Powersport – Sells used power sport motor vehicles
    • Wholesale Powersport – Sells power sport vehicles to other licensed dealers

Step 3 – Establish a Location

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

    • Enclosed building with office space
    • Stores all required books and records
    • Adequate electrical service
    • Restroom
    • Display space large enough for at least one vehicle
    • Hours of operation posted for the public and is open at least 4 continuous hours 3 days a week between 8 am and 9 pm

Dealers must submit the Place of Business Affidavit with their application.

Step 4 – Erect a Sign

Dealers must erect a permanently affixed sign at their business location that contains the business name and is visible from the nearest public street.

Step 5 – Obtain Zoning Approval

Dealers must ensure their business location is in compliance with all local zoning ordinances and should contact their local zoning official for confirmation.

Step 6 – Complete the Dealer Education Program

New dealer applicants must complete a mandatory dealer education program and pass the final exam before submitting their applications. Dealers must submit their course certificates with their applications. A list of approved instructors can be found here. After completing the program, dealers must submit the Mastery Examination Affidavit with their application.

Step 7 – Purchase a Surety Bond

Dealers must purchase and maintain a $50,000 auto dealer surety bond, plus an additional $15,000 surety bond if the dealer seeks to act as a salesperson.

Step 8 – Complete the Application

All new dealer regulatory license applications should be completed online or mailed to the following address:

Auto Industry Division
P.O. Box 17087
Denver, CO 80217-0087

Dealers must complete the application in its entirety, and submit the following items.

    • 8.a Background Check – All dealer applicants will be subjected to a background check when applying for the dealer license. Dealers must submit either a Verification of Fingerprints form and two fingerprint cards, or a receipt from a third-party fingerprint vendor who can be found here.
    • 8.b Addendum – Each applicant with a 5% or more ownership stake in the business must sign an Addendum Form, which must then be submitted with the application
    • 8.c Identification – All dealer applicants must submit a photocopy of an approved identification form, such as a driver’s license, with their application
    • 8.d Public Benefits – All dealer applicants must sign a Restrictions on Public Benefits Affidavit and submit it with their application
    • 8.e Financial Statement – A Statement of Financial Condition must be submitted for each dealer applicant
    • 8.f Business Documents – Dealers applying as a corporation, LLC, or LLP must submit the following documents:
      • Certificate of Good Standing with the Colorado Secretary of State
      • Constituent Filed Document (articles of incorporation, organization, etc)
      • All bylaws of the organization
      • Trade name if operating under a different business name
      • A full business plan detailing all:
        • Staffing
        • Hours of operation
        • Overhead costs
        • Sales projections
        • Inventory acquisition
        • Financing/lines of credit
      • A copy of the business location lease (if applicable)
    • 8.g Franchise Agreement – Dealers selling new vehicles must submit a franchise agreement with their application authorizing them to sell each make and model of new motor vehicle
    • 8.h Dealer Plates – Dealers must submit a Dealer/Wholesaler Plate Affidavit with their application in order to be eligible for dealer plates. Once the dealer is licensed, they can purchase dealer plates from their local county clerk. (Manager of Revenue for Denver County dealers). The dealer plate requirements are listed on the affidavit.
    • 8.i Sales Tax License – Dealers must submit a copy of their Sales Tax License with their application. Dealers can obtain a Sales Tax License here.
    • 8.j Salesperson License – Anyone who directly sells motor vehicles must be a licensed salesperson. To obtain the salesperson license, dealers must:

Step 9 – Pay Fees

Dealers must pay all required fees when submitting their applications. The most common fees are:

New Applicants

    • $959 application fee for dealers and wholesalers
    • $231 application fee for salespersons
    • $39.50 fee for fingerprint processing


    • $782 renewal fee for dealers and wholesalers
    • $178 renewal fee for salespersons

A full list of fees for all Colorado dealer types can be found here.

How Do Colorado Auto Dealers Renew Their License?

The Colorado dealer license expires June 30 each year regardless of the date of issuance and must be renewed before the expiration date. Dealers will be mailed a renewal packet 30 days prior to the expiration date. The renewal packet will contain instructions on how to renew the dealer license, including the address to mail the packet and all required fees.

What Are the Insurance Requirements for the Colorado Auto Dealer License?

The State of Colorado does not require dealers to obtain any form of liability insurance.

How Do Colorado Auto Dealers File Their Bond?

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

Auto Industry Division
P.O. Box 17087
Denver, CO 80217-0087

Both the $50,000 motor vehicle dealer and $15,000 salesperson surety bonds require signatures from both the surety company that issues the bond and the auto dealer. The surety company should include the following information on the bond form:

  • The legal name of entity/individual(s) buying the bond
  • Physical address where the business will operate
  • Dealer type the dealer is licensed as
  • Date the bond is signed
  • Signature of a public notary

How Can Colorado Auto Dealers Avoid Bond Claims?

A court of law must find the dealer is at fault before paying out the bond, decreasing the bond risk. 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:

  • Do not engage, or allow representatives of the business to engage, in any acts of fraud
  • Pay sellers of vehicles promptly and in full
  • Transfer all vehicle titles when sold
  • Do not engage in any illegal selling practices

What Other Insurance Products Can Agents Offer Dealers in Colorado?

Colorado 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 Colorado Auto Dealer Customers?

Colorado conveniently provides a public database to search for active motor vehicle dealers in the state. The database can be accessed 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.

Colorado Auto Dealer Bond