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How much does an auto dealer bond cost in Utah?
The cost of a Utah car dealer bond depends on the bond amount you need for the business as well as a review of your financial history. Highly qualified applicants typically pay as little as 1-3% of the total bond amount. The required bond amounts vary depending on business specifics:
- $75,000 surety bond is required for new or used motor vehicle or large trailer dealers
- $20,000 surety bond is required for body shop professionals
- $10,000 surety bond is required for motorcycle or small trailer dealers (small trailers are between 750-1,999 pounds)
Why do motor vehicle dealers need a bond in Utah?
The Utah Motor Vehicle Enforcement Division (MVED) requires auto dealers, special equipment dealers, crushers, and body shop professionals to a post surety bond prior to conducting business within the state.
By posting a Utah motor vehicle dealer, special equipment dealer, crusher, or body shop surety bond, principals (car dealers, crushers, or body shop professionals) pledge to observe and comply with all requirements and provisions of the Motor Vehicle Business Regulation Act as provided by Chapter 3, Title 41 of the Utah Code Annotated. Specifically, this bond ensures that principals refrain from the following while conducting business:
- Fraudulent representation
- Violating subsection 41-3-301(1), which requires a dealer to submit or deliver a certificate of title or manufacturer’s certificate of origin
- Violating subsection 41-3-402(1), which requires payoff of liens on motor vehicles traded in
NO HIDDEN FEES
These bonds protect any consumer who is harmed by the principal’s unlawful and unethical business practices from financial loss up to the full bond amount. The principal must reimburse the surety for any damages paid out.
Please note this page is for vehicle dealer licensing. If you have lost or need to obtain a vehicle title, a Utah certificate of title bond is required.
Terms of an auto dealer license bond
Utah motor vehicle dealer, special equipment dealer, crusher, or body shop bonds remain in full force and effect until canceled or violated. The surety can cancel the bond by giving written notice of withdrawal to both the principal and the Motor Vehicle Enforcement Division. Cancellation becomes effective 60 days after the administrator receives the notice.
Applicants must indicate on the bond application what license type they’re applying for (auto dealer, special equipment dealer, crusher, or body shop). If applying for a motor vehicle dealer license, applicants must specify if they plan to sell new vehicles, used vehicles, new motorcycles, used motorcycles, trailers, etc. Applicants must also indicate the type of organizational structure of the business.
How to become a car dealer in Utah
Prospective auto dealers in Utah must obtain a license issued by MVED. To qualify for a license, applicants must complete a Bonded Motor Vehicle Business Application. Along with the application, licensees must do the following:
Step 1: Establish a principal place of business at a location that complies with all local ordinances, including zoning for motor vehicle sales and is devoted exclusively to the sale of motor vehicles and business incidental to it
- Must be sufficiently bounded by fence, chain, posts or other wise marked to definitely indicate property boundaries
- Must have display space for at least 3 vehicles
- A permanent, enclosed building or structure large enough to accommodate the office of the dealership is required
- The building must provide a safe place to keep the books and other records of the business
- Cannot share any common area with another dealer, auction, dismantler, manufacturer, or any business or activity not directly related to motor vehicle commerce
- A clear, quality photo of the location must be submitted with the rest of the application and fees
Step 2: Erect permanent signage
- A sign of at least 24 square feet in size must be either painted on the dealership office, attached to the office with nails or bolts, or placed on posts in the display yard that have been securely anchored in the ground
- Must fully identify the dealer’s principal place of business and show the full name of the dealership as it is licensed
- A clear, quality photo of the sign must be submitted with the rest of the application and fees
Step 3: Obtain surety bond in applicable amount
Step 4: Include passport-quality photos of all owners, partners or corporate officers
Step 5: Get fingerprinted
- All individuals included as an owner (can be a Proprietor, LLC and LLP Member, Partner, or Corporate Officer) must submit a standard fingerprint card filled and verified by a local law enforcement agency and a fee of $20.00 with the application and forms
- Each owner must fill out a fingerprint waiver form
Step 6: Attend an 8 hour orientation course
- Online or in-person training can be found here
Step 7: Provide proof of valid sales tax license for sale of motor vehicles
- MVED can assist you in obtaining forms and filing for the Sales Tax License.
- TC-69, Utah State Business and Tax Registration is needed to apply
Step 8: Submit authorization letter
- The manufacturer authorizing you to sell a specific make or model must write a letter indicating you are authorized to do so
Step 9: File trade name
- All applicants must file with the Department of Commerce, 160 East 300 South, Salt Lake City, Utah
- Licensees who finance their sales or who arrange financing for their purchaser must be registered with the Department of Financial Institutions, 324 South State, Suite 201, Salt Lake City, Utah
Applications, bond, photos and fees must be submitted for approval to the Motor Vehicle Enforcement Division, 210 North 1950 West, Salt Lake City, Utah 84134. Make checks or money orders payable to Utah State Tax Commission. Allow five to ten working days after the application is received by MVED for an on-site inspection of the place of business. The license cannot be issued until after this inspection.