Oregon Auto Dealer Bond: A Comprehensive Guide for Insurance Agents
This guide provides information for insurance agents to help new and pre-owned car dealership owners on Oregon Auto Dealer bonds
At a Glance:
- Lowest Cost: $313 per year or $32 per month, based on the business owner’s credit.
- Bond Amount: $50,000
- Who Needs It: All dealers who seek to buy, sell, or exchange motor vehicles either directly or indirectly.
- 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 Oregon: The Oregon Department of Transportation, Driver and Motor Vehicle Services
Oregon Statute Chapter 822 mandates auto dealers operating in the state to obtain a motor vehicle dealer certificate with the Oregon DMV. The Oregon legislature enacted the certificate and regulations to ensure that dealers engage in ethical business practices and remit required taxes and fees. To provide financial security for the enforcement of the certificate law, dealers must purchase and maintain a $50,000 auto dealer surety bond.
What is the Purpose of the Oregon Auto Dealer Bond?
Oregon requires dealers to purchase the Motor Vehicle Dealer Bond as part of the application process for the Vehicle Dealer Certificate. 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 Oregon. In short, the bond is a type of insurance that protects the public if the dealer breaks the licensing laws.
How Can an Insurance Agent Obtain an Oregon Auto Dealer Bond for their Customer?
BondExchange makes obtaining an Oregon 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, 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 Oregon Auto Dealer Bond Cost?
The $50,000 Oregon Auto Dealer surety bond can cost anywhere between $313 to $4,500 per year or $31.30 to $450 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.
|Bond Cost (1 Year)
|Bond Cost (1 month)
|660 – 698
|649 – 659
|629 – 648
|600 – 628
|580 – 599
|570 – 579
|540 – 569
|500 – 539
*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 Oregon Define “Motor Vehicle Dealer”?
Oregon ORS 822.005 defines a motor vehicle dealer as anyone who:
- Buys, sells, brokers, trades or exchanges vehicles either outright or by means of any conditional sale, bailment, lease, security interest, or consignment
- Displays a new or used vehicle, trailer or semi trailer for sale
- Acts as any type of agent for the owner of a vehicle to sell the vehicle or acts as any type of agent for a person interested in buying a vehicle to buy a vehicle
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 Certificate in Oregon?
The process for applying for a motor vehicle dealer certificate in Oregon is pretty complex, and each certificate type has its own specific set of requirements. Below are the general guidelines, but dealers should refer to the Oregon Vehicle Title and Registration Handbook for details on the process.
Certificate Period – The dealer certificate period is valid for three years from the date of issuance, and must be renewed prior to the expiration date for dealers to continue operations.
Step 1 – Determine the Certificate Type
Oregon requires dealers to obtain specific certificates corresponding to the nature in which the dealer’s business operates. The most common certificate is the Three Year Vehicle Dealer Certificate for dealers and rebuilders allowing dealers to sell new and used vehicles. All other Oregon Dealer Certificate application forms can be found here.
Step 2 – Establish a Location
Before dealers can obtain their dealer certificate they must first buy or lease a permanent business location. The location must meet the following requirements:
- Have adequate space to display one or more vehicles that the dealer is permitted to sell
- Contain a means of communication for the public to contact the dealer during operating hours
- Display a permanent sign on the location’s exterior that contains the name of the business as listed on the dealer certificate. The sign must be visible to all major avenues of traffic
- Prominently display the dealer’s business certificate
Dealers can request exemptions from the first three requirements listed above on their application form.
Step 3 – Obtain Location Approval from the City/County
The city/county where the dealer’s business is located must sign the dealer’s certificate application stating the business location complies with all zoning requirements. Dealers can visit their local zoning, planning, or community development office to obtain the required signature. Some offices charge fees for signing the application.
Step 4 – Pass Dealer Education Program
Dealers seeking to buy, sell, or exchange vehicles will need to complete an 8 hour dealer education program to be eligible for licensure. A list of approved instructors can be found here.
Step 5 – Obtain Liability Insurance
Liability insurance is a prerequisite for licensure. Dealers must provide the DMV with proof of insurance when applying for their certificate.
Step 6 – Purchase a Surety Bond
Dealers must purchase and maintain a $50,000 motor vehicle dealer bond (form 735-370B)
Step 7 – Obtain FEIN Number
Dealers must submit their Federal Employer Identification Number to the Oregon DMV. Dealers can obtain an FEIN here.
Step 8 – Submit the Application
All new dealer regulatory certificate applications and dealer regulatory certificate renewal applications should be mailed to:
DMV Business Licensing Unit
1905 Lana Ave NE
Salem OR 97314
Step 9 – Pay Fees
Dealers must pay the following fees to obtain the appropriate certificate:
- Original certificate fee of $1,187 (includes one dealer plate)
- Additional location fee of $350 for each subsequent business location
- $54 fee for each subsequent dealer plate
How Does an Oregon Motor Vehicle Dealer Renew Their Certificate?
The Motor Vehicle Dealer Certificate is valid for three years and must be renewed before the expiration date. Dealers will be mailed a renewal packet 60 days prior to expiration of the current license listing all the steps to renew their certificate. The renewal packet will be mailed to the mailing address listed on the dealer’s certificate. A $150 fine will be administered if the dealer is more than 15 days late in submitting their renewal application.
How Do Oregon Auto Dealers File Their Bond With the DOT?
The $50,000 surety bond requires signatures from both the surety company that issues the bond and the auto dealer. The bond form will require the following items:
- Legal name of entity/individual(s) buying the bond
- Physical address where the business will operate
- Surety company’s name, address 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:
DMV Business Licensing Unit
1905 Lana Ave NE
Salem OR 97314
What Can Dealers Do to Avoid Claims Against the Oregon Auto Bond?
To avoid claims on the Oregon 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:
- Disclose all required information when transferring ownership of a vehicle
- Acquire and maintain all necessary vehicle permits
- Ensure all vehicles are properly registered
- Do not engage, or allow representatives of the business to engage, in any acts of fraud
- Pay sellers of vehicles promptly and in full
- Adhere to the dealer certificate plate regulations approved by the state
What Other Insurance Products Can Agents Offer Dealers in Oregon?
Oregon requires dealers to obtain comprehensive liability insurance on all vehicles with dealer plates. The required limits as outlined in ORS 806.070 are currently $25,000 single / $50,000 aggregate for bodily injury and $20,000 for property damage. 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 Oregon Motor Vehicle Dealer Customers?
Oregon conveniently provides a public database to search for active motor vehicle dealers in the state. The database can be accessed on the DMV 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.