Arizona Auto Dealer Bond

Arizona Auto Dealer Bond

The State of Grand Canyon National Park and Saguaro, Arizona is one of the fastest growing states in terms of population due to its low tax rate and sunny climate. Chances are that you are reading this article because you either live in Arizona now or planning to move there as a motor vehicle dealer. If you sell more than 4 vehicles in one year in Arizona, then you are required to be licensed as an auto dealer by the Arizona Department of Transportation (ADOT), Motor Vehicle Division

At a Glance

• Who Needs It: all new dealers, used dealers, public consignment auction dealers, parts recyclers, and wholesalers need the bond
• Bond Amount: $100,000 bond for all types of dealers except wholesalers and auto parts recyclers. $25,000 bond is required for wholesalers and $20,000 required for auto parts recyclers
• Cost: Starts at $250 for one year, the precise price is mainly due to the applicant’s complete credit profile

To get started, simply click on the “Quote” button below for your quote. It takes just 3 minutes.

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Frequently Asked Questions: 

Who Requires the Bond?

The Arizona Motor Vehicle Dealer Bond is required by the Arizona Revised Statute, Title 28-4362, Chapter 10. The ADOT handles all motor vehicle dealers licensing and application needs and regulates the industry.

Is There One Type of Bond for All Classes of Dealers? 

No, there is more than one type of bond. Unlike states such as Alabama that only have one bond amount for all classes of dealers, Arizona has three unique bonds for different classes of dealers. The least popular bond is the $20,000 bond for auto parts recyclers. There is also a $25,000 bond for wholesalers. Every other type of auto dealer (used, new) requires a $100,000 bond. 

How to Get an Arizona Auto Dealer Bond? 

It is very easy to obtain an Arizona Motor Vehicle Dealer Bond from SuretyNow.com. All you need to do is clicking on the quote button above to be redirected to our input flow and provide the following information: 

• Bond Type: $100,000 bond, the $25,000 wholesaler bond, or the $20,000 auto parts bond
• Effective Date of the Bond
• Business Name
• Business structure: LLP, LLLP, LLC, LLLC, Corporation, Individual or Partnership
• Business Address, including city and county
• Business owner name, address and social security number 

Note that a social security number is required for a soft credit pull. This requirement is consistent for all bonding companies across the United States. 

Why Is the Wholesaler Bond So Much Cheaper Than the Bond For Other Classes of Dealers? 

Wholesalers are those motor vehicle dealers who work exclusively with other licensed dealers. Licensed dealers typically are sophisticated individuals with experience in cars. They understand the process of selling and buying cars so they are less prone to be conned by another dealer. Therefore, there is no need for a large bond amount since the risk is much lower. 

What Factors Determine the Price of the Bond

One of the most common questions asked is what are the most important determinants of the bond price. There are many but the top ones are listed below: 

• Bond Amount, also known as the penal sum, is the maximum coverage under the bond. It is the maximum payout to the consumer who filed a claim against the bond if the claim was found to be valid. Obviously, the $25,000 bond would be less expensive than the $50,000 bond for the same applicant with the same profile
• Credit Score of the Applicant. The applicant’s credit score is another important determinant of the bond price. A higher credit score is an indication that the applicant has paid bills on time and does not have too much debt. Therefore, it is implied that this type of applicant is less likely to result in a claim

How to Avoid a Claim on the Bond?

A bond claim can be made if the following happens:

• Dealers did not pay a title, registration, or other fees or taxes 
• The dealer sold a vehicle without a valid title
• The dealer sold a vehicle that has a lien, unless the the buyers are informed of the lien prior to purchase

To avoid the claim on the bond, please do the following: 

• Pay all associated fees and taxes related to vehicles you are selling as well as motor vehicle dealership operations
• Legally hold the titles of the vehicles you are selling and transferring them to your customers after sale
• Ensure there is no liens in the vehicle you are selling or disclose all liens prior to the sale

Can I Cancel the Arizona Auto Dealer Bond? 

Yes, but a 60 day written notice to the Director of the Arizona Department of Transportation needs to be made. 

How Should I Submit the Arizona Motor Vehicle Dealer Bond? 

Applicant should mail the completed bond form with Power of Attorney to the following address

Mail Drop 552M

Dealer Licensing

PO Box 2100

Phoenix AZ 85001-21000

How to Apply for an Arizona Auto Dealer Bond? 

Step 1: Decide on a License Type among the following 

• New Auto Dealer
• Used Auto Dealer
• Wholesale Auto Dealer
• Wholesale Motor Vehicle Auction Dealer
• Broker
• Automotive Recycler
• Public Consignment Auction Dealer

Step 2: Decide on a business structure and form your business

• Individual 
• Partnership 
• Corporation
• Limited Liability Company
• Limited Liability Partnership
• Low-profit limited liability company (LLLC)
• Low-profit limited liability partnership (LLLP)

Step 3: Register Your Business

• Get an EIN Number from IRS
• Register Your Business with the Arizona Secretary of State

Step 4: Sign up for an account on ADOT Force

Step 5: Establish a business location

Step 6:Obtain an Arizona Auto Dealer Bond

Step 7: Apply for the Transaction Privilege Tax License

Step 8: Get Your Fingerprint and Pass Background Checks

Step 9: Complete and Submit Your License Application

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