South Carolina Auto Dealer Bond

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South Carolina Auto Dealer Bond: A Comprehensive Guide

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

At a Glance:

  • Lowest Cost – Based on Business Owner’s Credit
    • $30,000 Bond: $150 per year or $15 per month
    • $15,000 Bond: $100 per year or $10 per month
  • Bond Amount
    • $30,000 for all dealers, wholesalers, or recreational vehicles dealer and wholesalers
    • $15,000 for all wholesale auto auction, motorcycle dealers, and motorcycle wholesalers
  • Who Needs It: All individuals seeking to buy, sell, or trade motor vehicles in the State of South Carolina
  • 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 South Carolina: The South Carolina Department of Motor Vehicles is in charge of licensure and regulation of auto dealers
South Carolina Motor Vehicle Dealer Bond


South Carolina Code of Laws Title 56 Chapter 14 mandates auto dealers operating in the state to obtain a motor vehicle dealer license with the DMV. The South Carolina legislature enacted the license and regulations to ensure that dealers engage in ethical business practices. To provide financial security for the enforcement of the license law, dealers must purchase and maintain either a $30,000 or a $15,000 auto dealer surety bond dependent upon the dealer’s license classification.

What is the Purpose of the South Carolina Auto Dealer Bond?

South Carolina 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. 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 a South Carolina Auto Dealer Bond for their Customer?

BondExchange makes obtaining a South Carolina 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 South Carolina Auto Dealer Bond Cost?

The $30,000 South Carolina auto dealer bond can cost anywhere between $150 to $3,000 per year or $15 to $300 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 $30,000 bond amount.

Credit Score* Bond Cost (1 Year) Bond Cost (1 month)
749+ $150 $15
700 – 748 $210 $21
660 – 699 $288 $28.80
650 – 659 $300 $30
610 – 649 $450 $45
580 – 609 $750 $75
570 – 579 $2,400 $240
530 – 569 $2,700 $270
500 – 529 $3,000 $300

*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 South Carolina Define “Motor Vehicle Dealer”?

South Carolina Code of Laws Title 56 Chapter 14 defines a motor vehicle dealer as “any person, firm, corporation, or business entity licensed or required to be sell…recreational vehicles”. This definition includes all:

  • Retail dealers
  • Wholesale dealers
  • Wholesale auction dealers
  • Recreational dealers

South Carolina Auto Dealer Bond

BondExhange 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 South Carolina?

The process for applying for a motor vehicle dealer license in South Carolina is pretty complex. Below are the general guidelines, but dealers should refer to the South Carolina Department of Motor Vehicles Dealer and Wholesale Manual for details on the process. We also recommend referring to the SC DMV Dealer Requirements page located here.

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

Step 1 – Determine the License Type

South Carolina 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 South Carolina Dealer License:

    • Motor Vehicle Dealer: Sell retail or wholesale motor vehicles
    • Motor Vehicle Wholesaler: Sells vehicles solely to licensed motor vehicle dealers or other wholesale dealers
    • Motor Vehicle Wholesale Auction: Conduct auctions at the dealer’s place of business of vehicles not owned by the dealer.
    • Motorcycle Dealer: Sells retail or wholesale motorcycles
    • Motorcycle Wholesaler: Sells motorcycles in a wholesale capacity only
    • Recreational Vehicle Dealer: Sells RVs in a retail or wholesale
    • Temporary Recreational Dealer: Sells trailers and or RVs at fairs, events, ect.

Step 2 – Pay Fees

Dealers must pay a $50 license fee to obtain the appropriate license. Fees can be paid at the local DMV office

Step 3 – Take Pre-License Education Course

Non-franchise dealers must obtain a certificate of approval for completing an approved 8 hour pre-licensing class. To register for a pre-license education course, follow the instructions listed here.

Step 4 – Schedule a Courtesy Pre-Inspection

Retail dealers have the option to request a courtesy pre-license inspection of their business location before they submit their license application. This inspection is not required but is useful for dealers to determine whether their business location will pass formal inspection. To schedule an appointment, call the South Carolina DMV, Licensing and Audit Unit at 803-896-2611.

Step 5 – File Articles of Incorporation

Dealers organizing their business as an LLC, LLP, or corporation must file articles of incorporation with the South Carolina Secretary of State’s Office before they submit a license application.

Step 6 – Apply for Retail Tax License

Retail dealers must obtain a South Carolina Department of Revenue Retail License to be eligible for their dealer license. Dealers can obtain their license here.

Step 7 – Obtain Local Compliance Document

All dealers are required to obtain either a city/county compliance document, or a letter from the city/county indicating that it is not required.

Step 8 – Submit Criminal Background Check

All dealers must purchase a background screening report as part of their license application. The cost of the report is $34 and can be purchased here.

Step 9 – Submit the Application

The relevant forms for each license application can be found on this page. All new dealer regulatory license applications and dealer regulatory license renewal applications should be mailed to:

Attn: Dealer Licensing and Audit Unit
PO Box 1498
Blythewood, SC 29016-0023

Step 10 – Pass Formal Inspection

Once the application is submitted, retail dealers will need to pass a formal inspection of their business location to receive their dealer license.

How Does a South Carolina Auto Dealer Renew Their License?

The Motor Vehicle Dealer License is valid for one year and must be renewed annually. To renew their license, dealers must submit their renewal application at their local DMV branch along with the following information:

  • $20 Renewal Fee plus $20 per dealer plate
  • Certificate of Insurance for Garage Liability
  • SCDMV Form DLA-1C to record all wholesale and out-of-state sales
  • Criminal Background Check for all owners

What Are the Insurance Requirements for South Carolina Auto Dealers?

The State of South Carolina requires all auto dealers to maintain garage liability insurance on all vehicles with dealer plates to remain in compliance with licensing regulations. Dealers must also file either a $30,000 or $15,000 motor vehicle dealer bond.

How Do Dealers File Bonds with the South Carolina Department of Motor Vehicles?

Motor Vehicle dealers must file their completed and signed bond with the South Carolina Department of Motor Vehicles, Dealer Licensing and Audit Unit. The bond form should include the following information:

  • Signatures of the both the dealer and the bonding company
  • 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:

South Carolina Department of Motor Vehicles
Dealer Licensing and Audit Unit
P.O. Box 1498
Blythewood, SC 29016-0023

What Can Dealers Do to Avoid Claims Against the South Carolina 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:

  • Disclose all required information when transferring ownership of a vehicle
  • 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 license plate regulations approved by the state

What Other Insurance Products Can Agents Offer Dealers in South Carolina?

In addition to the surety bond, South Carolina requires dealers to obtain garage liability insurance on all vehicles with dealer plates. 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 South Carolina Auto Dealer Customers?

South Carolina 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.

South Carolina Auto Dealer Bond