Used Motor Vehicle Dealer, Wholesaler, or Auto Auction ($25,000) Bond - Statewide in Arkansas

Brief Summary

One lot, one $25,000 bond. Several lots and you have a choice most pages never mention: Arkansas lets a dealer file a single $100,000 corporate surety bond covering all licensed locations instead of a separate $25,000 bond for each. Run the math before you buy, because past four locations the blanket bond is usually the cheaper paper. Either way the surety is never liable for more than $25,000 on a claim, and proceeds are paid only on a judgment from an Arkansas court.

Ark. Code Ann. 23-112-607(d) requires each applicant for a used motor vehicle dealer, wholesaler or auto auction license to obtain a corporate surety bond in the penal sum of twenty-five thousand dollars. A dealer operating multiple locations may instead obtain a corporate surety bond in the penal sum of one hundred thousand dollars covering all licensed locations. The bond is executed in the name of the State of Arkansas or any aggrieved party and serves as indemnity for any loss and reasonable attorney's fees sustained by a retail buyer by reason of the acts of the person bonded when such an act constitutes a violation of the law. The surety shall in no event be liable for more than twenty-five thousand dollars.

We can help with all Arkansas bonds!

How to Apply for a Used Motor Vehicle Dealer, Wholesaler, or Auto Auction ($25,000) Bond:

• Count your locations first. One $25,000 bond per applicant, or a single $100,000 corporate surety bond covering all licensed locations if you run more than one.
• Confirm you are not exempt. Receivers, trustees, administrators, executors and guardians, public officers on official duty, mortgagees and secured parties realizing no profit, mechanics selling under a lien, individuals selling a personal vehicle titled in their own name, and new motor vehicle dealers selling used vehicles in conjunction with their new vehicle operations are all outside the license requirement.
• Be ready to establish that you sold at least five used motor vehicles during the previous calendar year.
• Legal business name exactly as it will appear on the Arkansas State Police license application.
• Owner or officer information for the underwriting and credit review.
• Complete the bond application and review the quoted premium.
• Receive the executed bond on the Arkansas State Police Surety Bond Used Motor Vehicle Dealer, Wholesaler, or Auto Auction form, naming the State of Arkansas.
• Have the bona fide established place of business ready: primarily used for selling used motor vehicles, a telephone listed in the business name, signage legible from the street, and a locking repository for business records.
• File the bond with the license application and the fee, $250 per year plus $125 for each additional location.
• Renew during the month of January. The license period runs January 1 through December 31.
• If the surety files its thirty day cancellation notice with you and with the Arkansas State Police, replace the bond inside that window.

Detailed Information About the Arkansas Used Motor Vehicle Dealer, Wholesaler, or Auto Auction ($25,000) Bond:

Two ways to bond, and the second one saves money

The default is a corporate surety bond in the penal sum of $25,000 per applicant. That is what a single location dealer, a wholesaler or an auto auction files.

Section 23-112-607(d) also allows a dealer with more than one location to obtain one corporate surety bond in the penal sum of $100,000 covering all licensed locations. That is the fact competitor pages leave out. If you are running five rooftops, five separate $25,000 bonds is $125,000 of penal sum and five premiums. One $100,000 blanket bond is a single filing. Price both.

What does not change either way is the surety's exposure. The statute says the surety shall in no event be liable for more than $25,000.

Who the bond answers to, and how it actually pays

The bond is executed in the name of the State of Arkansas or any aggrieved party. It is an indemnity for any loss and reasonable attorney's fees sustained by a retail buyer by reason of the acts of the person bonded, where that act constitutes a violation of the law.

Proceeds are paid either to the State of Arkansas or to the retail buyer upon a judgment from an Arkansas court. So this is not a demand you satisfy over the phone. A claimant has to reduce it to a judgment first.

The surety keeps defenses. It may raise them against a judgment obtained by fraud or collusion, and against a judgment for acts that do not constitute violations of the law.

The Arkansas State Police bond form carries the same $25,000 penal sum, names the State of Arkansas, cites Arkansas Code Annotated 23-112-601 et seq., and gives the surety the right to cancel on thirty days prior written notice filed with the principal and with the Arkansas State Police.

Who has to be licensed

A used motor vehicle dealer is any person, wholesaler or auto auction who, for a commission or with intent to make a profit, sells, brokers, exchanges, rents or leases used motor vehicles, or who is wholly or in part in the business of buying, selling, trading or exchanging them.

A wholesaler is any person, resident or nonresident, who in whole or in part primarily sells used motor vehicles to motor vehicle dealers. An auto auction is any person who operates or provides a place of business or facilities for the wholesale exchange of motor vehicles between duly licensed motor vehicle dealers, or a licensed used vehicle dealer selling in an auction format.

The sale or attempted sale of five or more used motor vehicles in any one calendar year is prima facie evidence of dealer status. Cutting the other way, a license applicant has to establish that he or she sold at least five used motor vehicles during the previous calendar year.

Who is exempt

Six categories sit outside the license requirement. A receiver, trustee, administrator, executor or guardian. A public officer while performing official duties. A mortgagee or secured party realizing no profit. A mechanic selling under a lien. A person selling a motor vehicle titled in his or her own name and used exclusively as a personal vehicle. And a new motor vehicle dealer selling a used motor vehicle in conjunction with new motor vehicle dealer operations.

That last one matters. A franchised new car store does not post this bond for its used inventory.

The place of business is a real requirement

The statute wants a bona fide established place of business used primarily for the sale of used motor vehicles, a telephone number listed in the name of the business, signage legible from the street, road or highway, and a filing cabinet or other repository adequate to secure business records under lock and key. The rules also require notice within ten days if a licensee ceases to conduct business at the location on file.

A post office box and a cell phone will not clear this, and the bond does nothing about it.

The January window

The fee covers a licensing period beginning January 1 and ending December 31, renewable during the month of January following its expiration. The fee is $250 per year, with additional locations at $125 each.

Because the license runs on the calendar year while the bond runs on its own anniversary and can be cancelled on thirty days notice, track the two dates separately.

What is at stake if you skip it

Operating outside the licensing scheme escalates fast. A first violation is a Class A misdemeanor, a second is a Class D felony, and a third or subsequent violation is a Class D felony with the dealer's license suspended for three years.

One free thing worth doing

Once the license is issued, list the dealership on BestAutoDealerIn.com. It is free for any auto dealer, buyers search it by ZIP code and state, the listing carries a backlink that helps your own site rank, it sends referrals, and we write blog posts on listed dealerships.

Eligibility and Requirements for a Arkansas Used Motor Vehicle Dealer, Wholesaler, or Auto Auction ($25,000) Bond:

• A corporate surety bond in the penal sum of $25,000, or $100,000 covering all licensed locations for a multi location dealer.
• Executed in the name of the State of Arkansas or any aggrieved party.
• Indemnity for any loss and reasonable attorney's fees sustained by a retail buyer by reason of acts of the bonded person that violate the law.
• Surety liability capped at $25,000 in any event.
• Proceeds payable to the State of Arkansas or to the retail buyer upon a judgment from an Arkansas court.
• Thirty days prior written cancellation notice filed with the principal and the Arkansas State Police.
• Business name on the bond matching the license application exactly.
• Owner credit review. At this size credit generally shapes the rate rather than eligibility.

Arkansas Used Motor Vehicle Dealer, Wholesaler, or Auto Auction ($25,000) Bond FAQs:

Official and Additional Resources for the Arkansas Used Motor Vehicle Dealer, Wholesaler, or Auto Auction ($25,000) Bond: