Arizona Motor Vehicle Dealer Bond

Orange Button to instantly purchase a new $100,000 Arizona Motor Vehicle Dealer Bond.

Blue and orange button to instantly purchase an Arizona Motor Vehicle Dealer Bond. The State of Arizona on the left, a car on the right.

 

Arizona required motor vehicle dealers to be licensed by state. Part of obtaining and keeping a dealer license is getting an Arizona Motor Vehicle Dealer Bond. Learn how to easily purchase these bonds online and more.

What is a Motor Vehicle Dealer in Arizona?

The state defines a motor vehicle dealer as:

“A new motor vehicle dealer, a used motor vehicle dealer, a public consignment auction dealer, a broker or a wholesale motor vehicle auction dealer, excluding a person who comes into possession of a motor vehicle as an incident to the person’s regular business and who sells, auctions or exchanges the motor vehicle.”

Motor Vehicle means:

“An automobile, motor bus, motorcycle, truck or truck tractor or any other self-propelled vehicle, trailer or semi-trailer.”

There are over 300 new vehicle dealers and more than 500 used vehicle dealers currently in Arizona.

What is an Arizona Motor Vehicle Dealer Bond?

A chart showing the two items that an Arizona Motor Vehicle Dealer Bond guarantees. A dealer's lot in the background.

An Arizona Motor Vehicle Dealer Bond is a type of license surety bond that must be obtained by motor vehicle dealers in the state of Arizona. It is a three-party agreement between an auto dealer (the principal), the state of Arizona (the obligee) and a third-party bond company (the surety). The bond provides a financial guarantee to compensate parties damaged by the dealer’s failure to meet certain state codes and requirements. 

An Arizona Motor Vehicle Dealer Bond guarantees that a motor vehicle dealer will:

  1. Issue a valid vehicle title certificate free and clear of any prior owner’s interests and all liens except a lien created by or expressly assumed in writing by the buyer of the vehicle.
  2. Faithfully handle any customer prepaid title, registration or other related fees or taxes.

What is the Required Amount of an Arizona Motor Vehicle Dealer Bond?

The Arizona Motor Vehicle Dealer Bond amount is determined by the State of Arizona. It can be as low as $20,000 for an Automobile Recycler, not more than $100,000 for a Motor Vehicle Dealer. Most motor vehicle dealers have a bond amount set at $25,000.

The amount of the bond is the maximum that the surety company will have to pay regardless of the number of claims filed, or the dollar amount of those claims. This is referred to as the bond penalty. However, payment under the bond does not typically relieve the dealer of any further liability.

How to Obtain an Arizona Motor Vehicle Dealer Bond

Arizona Motor Vehicle Dealer Bonds can be purchased instantly online. A simple application and credit check of one of the dealership’s owners will be required. Should the owner’s credit qualify, the bond can be paid for and printed instantly. 

Blue and orange button to instantly purchase an Arizona Motor Vehicle Dealer Bond. The State of Arizona on the left, a car on the right.

Orange Button to instantly purchase a new $100,000 Arizona Motor Vehicle Dealer Bond.

Can I Obtain a Bond with Bad Credit?

Credit challenges can happen to anyone. Axcess Surety works with many specialty markets and can typically get Arizona Motor Vehicle Dealers Bonds approved for dealerships in all scenarios. Dealers with credit challenges should expect to provide additional information and may have to pay higher costs. However, our people will work with you for quick approval at the best terms available.

What Do Arizona Auto Dealer Bonds Cost?

Arizona Auto Dealer Bonds will cost 1% of the bond amount per year for most dealers. For example, a $25,000 bond would cost $250. Larger bonds may cost less. A $100,000 New Vehicle Dealer Bond can be purchased for $700 a year online. However, better pricing may be available depending on the bond company. Additionally, many bond companies provide significant discounts for dealers who purchase multiple years upfront. These discounts can be up to 30%.

A car dealership in the background along with an Arizona flag. Texts says that Arizona Motor Vehicle Dealer Bonds cost 1% for most dealers.

How Does an Arizona Auto Dealer Bond Work?

The Arizona motor vehicle dealer pays a premium and agrees to indemnify a surety bond company. In return, the bond company provides the bond and a guarantee to the State of Arizona on behalf of the dealer. Should the dealer violate the terms of the bond, a customer or the State of Arizona can make a claim directly with the bond company. 

The bond company will have to pay the claim. This process is a benefit for the public because the surety bond company is a strong financial entity that is legally obligated to pay claims. This makes it faster and easier to collect when someone has been harmed by a dealer. 

Auto Dealer Bonds are not insurance. If the bond company does pay a valid claim, they have the right to seek reimbursement from the dealer and any other indemnitors under the indemnity agreement.

Duration and Cancellation

Arizona Motor Vehicle Dealer Bonds must be in place as long as the dealer maintains a license in Arizona. The bond may be canceled by giving the State of Arizona 60 days’ written notice. However, the surety bond company and dealer will still be responsible for claims that occurred while the bond was active and during the cancellation period.  

Summary

Arizona Motor Vehicle Dealers are required to provide a dealer bond under Arizona Code 28-4362. These bonds are low cost and can be purchased online in minutes. Auto dealers may also find more information about surety bonds by visiting our Complete Guide. Dealers may also need additional surety bonds which can also be purchased at our Arizona Surety Bond page. Contact the bonds experts at Axcess anytime for all your surety bond questions and needs. 

 

Vice President at Axcess Surety
Vice President of Axcess Surety. Surety Bond and financial expert dedicated to helping contractors, businesses and individuals understand and obtain surety bond credit.
Josh Carson, AFSB
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