Georgia Auto Dealer Bond: A Comprehensive Guide

October 16th, 2020

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

At a Glance:

• Average Cost: $306 – $2,624 for a two-year term, based on the business owner’s credit
• Bond Amount: $35,000
• Who Needs It: All individuals and businesses that sell or deal in used 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 Georgia: The Georgia Board of Used Motor Vehicles
• When Does the Bond Expire: The bond must run concurrent with the Georgia Dealer License, expiring March 31st of even years

Background

Georgia Code 40-2-38 mandates used auto dealers operating in the state to obtain a used motor vehicle dealer license with the Georgia Board of Used Motor Vehicles. The Georgia 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 $35,000 motor vehicle dealer surety bond to be eligible for licensure.

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What is the Purpose of the Georgia Auto Dealer Bond?

Georgia 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 Georgia. 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 Georgia Auto Dealer Bond?

BondExchange makes obtaining a Georgia 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? Enroll 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.

How Much Does Georgia Used Auto Dealer Bond Cost?

The $35,000 Georgia Motor Vehicle Dealer surety bond can cost anywhere between $306 to $2,624 for a two-year term. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500. The chart below offers a quick reference for the approximate bond cost on the $35,000 bond requirement.

$35,000 Georgia Used Auto Dealer Bond Cost

*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 Georgia Define “Used Motor Vehicle Dealer”?

To paraphrase Georgia Code 43-47-2, a used motor vehicle dealer is anyone who sells, leases with the option to purchase, or negotiates the sale of used motor vehicles either directly or indirectly. Exemptions to this definition include:

• Franchised motor vehicle dealers
• Any person acting under a court order
• Public officers performing official duties
• Persons disposing of motor vehicles that were acquired for their own personal use
• Financial institutions and insurance agencies selling repossessed motor vehicles
• Persons or business entities who sell motor vehicles through the course of their business operations
• Anyone selling motor vehicles that are not meant for transportation. For example, an antique dealer would fit this description
• Auctioneers running an estate auction or an auction selling motor vehicles along with other forms of property

How Do Dealers Apply for a Used Motor Vehicle Dealer License in Georgia?

The process for applying for a motor vehicle dealer license in Georgia is pretty complex. Below are the general guidelines, but dealers should refer to the Application Form for details on the process.

License Period – The Georgia used dealer license expires on March 31 of every even-numbered year (2022, 2024, etc) and must be renewed before the expiration date

Step 1 – Establish a Location

Dealers are required to establish a permanent place of business that has a salesroom/office, a landline telephone registered in the business’s name, and a permanently affixed sign indicating that used motor vehicles are sold at the location. The dealer’s business location must have approval from the dealer’s local zoning authority certifying that the location is in compliance with all applicable zoning regulations.

Step 2 – Pass a Preliminary Inspection

Dealers must pass a preliminary inspection of their business locating, conducted by the Board of Used Motor Vehicles, ensuring that it meets all the necessary requirements.

Step 3 – Acquire Insurance

Dealers must purchase garage liability insurance with limits of 50/100/25, or a single limit of $125,000. Dealers must submit their certificate of insurance with their application.

Step 4 – Purchase a Surety Bond

Dealers must purchase and maintain a $35,000 auto dealer surety bond. The bond must run in alignment with the license and expire on March 31st of even years.

Step 5 – Attend Dealer Seminar

New dealer applicants must attend a state-approved dealer training seminar and submit proof of attendance with their application. Dealers can find a list of state-approved instructors here.

Step 6 – Complete the Application

All new dealer regulatory license and renewal applications should be mailed to the following address:

State Board of Registration of Used Motor Vehicle Dealers & Used Motor Vehicle Parts Dealers
Used Motor Vehicle Dealers Division
237 Coliseum Drive
Macon, Georgia 31217

• • 6.a Sales Tax Number – Dealers must submit their Georgia sales tax number on their dealer application. Dealers can obtain a sales tax number with the Georgia Department of Revenue here.
  • 6.b Background Check – Dealers must obtain a fingerprint-based background check when submitting their application. Dealers can register for a fingerprint background check here.
  • 6.c Pictures – Dealers must submit pictures of their business location including the inside, outside, and signage.

Step 7 – Pay Fees

Used motor vehicle dealers in Georgia must pay a $150 application fee, per branch location, when submitting their application

How Do Georgia Auto Dealers Renew Their License?

The Georgia used dealer license expires on March 31 of every even-numbered year (2022, 2024, etc) and must be renewed before the expiration date. Dealers must pay a $150 renewal fee and can renew their license online here.

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

The State of Georgia requires dealers to obtain garage liability insurance limits of 50/100/25 or a single limit of $125,000. Dealers must file a $35,000 motor vehicle dealer surety bond. Readers can check out our Insurance Page for an in-depth analysis of Georgia’s insurance requirement for dealers.

How Do Georgia Auto Dealers File Their Bond?

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

State Board of Registration of Used Motor Vehicle Dealers & Used Motor Vehicle Parts Dealers
Used Motor Vehicle Dealers Division
237 Coliseum Drive
Macon, Georgia 31217

The $35,000 Auto Dealer surety bond requires 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
• Date the bond goes into effect
• Date the bond will expire
• Surety company’s name and address

How Can Georgia Auto Dealers Avoid Bond Claims?

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
• Pay taxes on time and in full. Dealers should consider setting aside tax obligations as they accrue.
• Do not engage in any illegal selling practices

What Other Insurance Products Can Agents Offer Dealers in Georgia?

Georgia requires used motor vehicle dealers to obtain 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 Georgia Auto Dealer Customers?

Georgia 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.