Louisiana Car Dealer License Guide

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Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Louisiana auto dealer bond needs.

Learn how to get a Louisiana car dealer license, and contact us today to request a quote on the bond you need.

What Are the Different Types of Louisiana Auto Dealer Licenses?

The Louisiana Motor Vehicle Commission handles the licensing of new vehicle or franchise dealers. Used car dealers are licensed by the Louisiana Used Motor Vehicle Commission. The used vehicle category is further broken down by the specific type of vehicle

This articles focuses on used car dealer licenses only. 

What Are the Steps in the Licensing Process?

Before applying for an initial license as a used car dealer you’ll need to:

  • Form a business entity and register it with the state to obtain a Tax ID number.
  • Secure a permanent business location and obtain proof from the local zoning authority that the location complies with all local zoning laws.
  • Attend the pre-licensing training seminar and obtain evidence of completion. The seminar registration form is included in the application for a Louisiana used car dealer license.
  • Purchase garage liability insurance coverage of at least $55,000 and obtain a copy of the insurance certificate.
  • Purchase a Louisiana auto dealer bond in the amount of $50,000.

You may complete and submit your application online or download the application and submit it by hand or by mail to the Commission’s office in Baton Rouge. The application fee is currently $400.

A Louisiana car dealer license is good for two years, expiring on December 31 of the second year.

Why is a Louisiana Auto Dealer Bond Required?

A Louisiana auto dealer bond is a type of surety bond known as a license and permit bond because purchasing one is a prerequisite for becoming licensed.

The bond is the dealer’s pledge to operate in compliance with Chapter 4-C of Title 32 of the Louisiana Revised Statutes. It guarantees the payment of taxes and any fines or fees owed to the state as well as the payment of valid claims filed against the bond by consumers financially harmed by the unlawful business conduct of the dealer.

How Are Louisiana Auto Dealer Bond Claims Paid?

When you purchase a Louisiana auto dealer bond you enter into a legally binding contract among three parties referred to as the obligee, the principal, and the surety.

  • The “obligee” requiring the bond is the Used Motor Vehicle Commission on behalf of the state of Louisiana.
  • The “principal,” who is legally obligated to pay legitimate claims against the bond, is the dealer.
  • The “surety” is the company guaranteeing the principal’s payment of claims.

While the dealer bears full legal responsibility for claims, the principal guarantees payment. So, unless the principal pays a claim right away, the surety will pay it for the principal. This is an extension of credit to the principal, not a gift. The principal is still obligated for the claim amount but must now pay it to the surety rather than to the claimant.

How Much Does a Louisiana Auto Dealer Bond Cost?

The annual premium rate for a new or renewal Louisiana auto dealer bond is determined by multiplying the $50,000 required bond amount by the premium rate assigned by the surety. It should come as no surprise that the main underwriting concern is the risk that the principal won’t repay the surety for claims paid on behalf of the principal. 

The best measure of that risk is the principal’s personal credit score. A high credit score suggests that the risk of the surety having to take legal action against the principal to recover the claim amount is very low. Therefore, the surety will assign a premium rate that could be as low as one percent. A principal with a low credit score would be regarded as a higher risk and be assigned a higher premium rate.

Our surety bond professionals will get you the Louisiana car dealer bond you need at a competitive rate.