What is an Maryland Car Dealer Bond?
Maryland Car Dealer Bonds are required by Maryland's AODMV to obtain your Dealer license. The beginning MVD Bond amount for the sale of New vehicles is set at $50,000. The bond amount changes based upon the number of vehicles sold. The Used vehicle dealer bond amount starts out at $15,000. The Auto Dealer bond ensures that the principal shall comply with the conditions of any contract made by such licensee in connection with the sale or exchange of any motor vehicle and shall not violate any of the provisions of law relating to the conduct of the business for which it is licensed.
The State requires a vehicle Dealer bond for each license you hold:
Type of Business
Number of Vehicles Sold or Transferred
Bond Amount Required
New Vehicle Dealer License
Used Vehicle Dealer License
Wholesale Vehicle Dealer License
Motorcycle Dealer License
Motorcycle Dealer License
Emergency Vehicle Dealer
Emergency Vehicle Dealer
Trailer Dealer License
Trailer Dealer License (trailers under 15 feet in length)
Trailer Dealer License (trailers 15 feet or longer)
Manufacturer, Second Stage Manufacturer, Distributor, or Factory Branch License
Different parts of a bond:
There are 3 parts to a MVD surety bond. The Principal "YOU", The Surety Company, and the Obligee. The Principal is the business or individual applying for the MVD Surety Bond. The Obligee is the individual or entity requiring the Surety Bond and the Surety Company is the company who provides the Surety Bond coverage.
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Maryland MVD Bond Requirements and Information:
- Application for Vehicle Dealer’s License – this form must be fully completed and signed and dated by all dealership officers, partners, or owners (licensees). Be sure to include your Federal Employer Identification Number (FEIN) and the Social Security Numbers of all officers/partners/owners.
- Zoning Approval Form - A zoning official from the jurisdiction where the facility will be located must sign the form confirming that the property is zoned appropriately for a new vehicle dealership.
- Surety Bond of Vehicle or Trailer Dealer - This form is proof of your insurance coverage. It must include the full name of the dealership, including any “trading as” name. It also must include the full names and signatures of all officers, partners, or owners, exactly as shown on the application. Your bonding company must stamp the form with its Seal of Surety and a representative (usually the company’s lawyer) must sign the form.
- Power of attorney – This form is required only when a rider or new Surety Bond is submitted.
- Proof of Workers' Compensation coverage or exemption from coverage requirements - If you have Workers' Compensation insurance, complete information requested on the Application for Vehicle Dealers License in the appropriate section. If you are claiming exemption from providing Workers' Compensation Insurance for your employees, please contact the Workers' Compensation Office at 410-864-5400 or visit their website at www.wcc.state.md.us to obtain information and the appropriate forms for businesses who do not provide this type of coverage.
- Criminal background check - A Maryland criminal background check is required for all officers, partners, owners (licensees) and others who have a financial interest in the dealership. In addition, if any of the licensees or other person with a financial interest in the dealership resides outside of Maryland, or has lived in Maryland for less than 1 year, then their current/former state of residence also must conduct a criminal background check. A background check from a private company will be accepted if the Maryland State Police licenses the company as a Private Investigation Agency. The results of these other state criminal background check must be submitted.
- Trader’s License (copy) - This license can be obtained from the Circuit Court in the jurisdiction where the dealership is located.
- Business registration letter - This document can be obtained from the Maryland State Department of Assessments and Taxation (SDAT). It verifies that your dealership is licensed to do business in the State of Maryland. All dealer applicants must register with the SDAT, even if they are based in another state. Both corporate and trading names must be registered. You may use the printout that can be obtained from the SDAT website.
- Automotive Repair Facility Contract – This form is used to certify that you will have a repair facility within 5 miles of each dealership location.
- Franchise Approval from the Manufacturer - A separate franchise approval letter must be submitted from each manufacturer whose vehicles will be sold by your dealership.
- New Vehicle Certification Form – This form certifies that you are not functioning as both a seller of new vehicles and a manufacturer or distributor at the same time.
- Insurance Information Form – This form certifies that you have vehicle liability insurance for the vehicles you will be selling and, if required, Workers' Compensation insurance for your employees.
- Other Forms – Additional forms may be needed depending upon your situation:
- Letter of Good Standing – If your dealership is licensed in another state and you are now applying to open a new location in Maryland, you will need to obtain this letter from the Maryland Department of Assessments and Taxation. The letter indicates that your business is operating in compliance with state laws and requirements.
- Use and Occupancy Permit – This form is needed if you will be using a trailer as an office or the local zoning board requires that you obtain the Permit.
- Dealer Orientation Request – You are urged to participate in an orientation given by the MVA.