NEW Motor Vehicle Dealer ($100,000) Bond - Statewide in Arizona

Brief Summary

The $100,000 figure is fixed by rule, but the number of bonds you file is not. Arizona wants a separate original bond for every county where you keep an established place of business, so a dealer with lots in Maricopa and Pima files two $100,000 bonds, not one. Getting that right the first time is the difference between a license issued in weeks and an application returned. Premium is a fraction of the bond amount paid annually, so no working capital gets tied up with the state.

Arizona requires a $100,000 surety bond from every new motor vehicle dealer applicant. A.R.S. 28-4362 authorizes the bond and caps it at $100,000, and Ariz. Admin. Code R17-5-402 sets the actual amount by license type. The bond runs to the State of Arizona on ADOT form 38-1301 and cannot be cancelled without at least 60 days notice to the Director. A separate original bond is required for each application and for each county in which the applicant has an established or principal place of business.

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How to Apply for a NEW Motor Vehicle Dealer ($100,000) Bond:

• Confirm your license type. Only a new motor vehicle dealer, used motor vehicle dealer, or public consignment auction dealer posts $100,000 under R17-5-402.
• Count your counties. One separate original bond is required for each county holding an established or principal place of business.
• Legal entity name exactly as it will read on the MVD dealer application, form 46-0408.
• Owner or officer name, home address and Social Security number for the credit review.
• Complete the bond application and review the quoted annual premium.
• Pay the premium and receive the executed bond on ADOT form 38-1301 with the power of attorney attached.
• File the bond and power of attorney with the dealer application packet to MVD Dealer Licensing, Mail Drop 552-M, PO Box 2100, Phoenix AZ 85001-2100.

Detailed Information About the Arizona NEW Motor Vehicle Dealer ($100,000) Bond:

The amount depends entirely on your license type

Arizona does not use one dealer bond. Ariz. Admin. Code R17-5-402(A) sets four amounts, and picking the wrong one is the most common filing error:

• $100,000 for a new motor vehicle dealer, a used motor vehicle dealer, or a public consignment auction dealer
• $25,000 for a broker, a wholesale motor vehicle dealer, or a wholesale motor vehicle auction dealer
• $20,000 for an automotive recycler

The statute itself, A.R.S. 28-4362, does not name $100,000 as a required figure. It says the bond must be in an amount prescribed by the director of at least twenty thousand dollars for an automotive recycler's license and not more than one hundred thousand dollars for all other licenses. The $100,000 comes from the rule, not the statute. If you are quoting off the statute alone you will not find your number.

One bond per county, not one bond per dealer

R17-5-402(B) requires an applicant to submit a separate, original bond for each application and for each county in which the applicant or licensee has an established place of business or a principal place of business. Multiple locations inside a single county do not multiply the bond. Crossing a county line does.

What the bond actually covers

Under A.R.S. 28-4362 the bond answers to any person who suffers loss because the dealer failed to pay over fees or taxes collected from a customer for title and registration, or failed to deliver a certificate of title free of undisclosed liens the buyer did not agree to assume. It is not a warranty on the vehicle and it is not a substitute for a dealer's own liability coverage.

Exemptions that exist, and the one that does not

A.R.S. 28-4361 exempts several categories from the fingerprint and criminal records check, including manufacturers, importers, factory branches and distributors, applicants under eighteen, applicants who cleared a check within the past five years or hold a current license, and new motor vehicle dealers. That is an exemption from the background check only. Nothing in A.R.S. 28-4362 or R17-5-402 waives the bond for an established dealer, a franchised dealer, or a dealer already licensed in another state.

Same trap with dealer education. A.R.S. 28-4361 lets the director impose education requirements on initial or renewal used and wholesale dealer licenses. Completing it does not reduce or remove anyone's bond, and new motor vehicle dealers are outside that education provision to begin with.

Form and execution details that get applications kicked back

The bond goes on ADOT form 38-1301, Vehicle Dealer Bond, current revision R08/26. R17-5-402 requires the applicant to sign, plus all partners for a partnership or one officer for a corporation. The completed form must carry an embossed stamp, seal, or sticker from the bond company, and ADOT will not accept a handwritten bond. The bond stays in force until cancelled, and the surety must give the Director at least 60 days written notice before termination takes effect.

Eligibility and Requirements for a Arizona NEW Motor Vehicle Dealer ($100,000) Bond:

• A surety company authorized to transact surety business in Arizona.
• Bond amount of exactly $100,000 for a new motor vehicle dealer license.
• State of Arizona as obligee, written on ADOT prescribed form 38-1301.
• Signature of the applicant, plus all partners for a partnership or one officer for a corporation.
• Embossed stamp, seal, or sticker from the bond company on the completed form. Handwritten bonds are rejected.
• Power of attorney for the attorney in fact who signs for the surety.
• Owner credit review. At this bond size credit generally sets the rate rather than eligibility.

Arizona NEW Motor Vehicle Dealer ($100,000) Bond FAQs:

Official and Additional Resources for the Arizona NEW Motor Vehicle Dealer ($100,000) Bond: