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

What Are the Different Types of Maryland Car Dealer Licenses?

Maryland’s Motor Vehicle Administration (MVA) issues motor vehicle dealer licenses in three main categories:  new vehicle dealers, used vehicle dealers, and wholesale vehicle dealers. The boxes provided on the license application form for checking off the type of license requested also include options for motorcycles, trailers, boat trailers, and emergency vehicles. This article focuses on obtaining a license as a used car dealer, which is the most commonly issued dealer license in Maryland. 

What Are the Steps in the Licensing Process?

The forms you will need to fill out as part of your application, along with detailed instructions for completing and submitting them, are available as a downloadable PDF. These include the:

  • Application for Vehicle Dealer’s License
  • Zoning Approval Form
  • Department of Assessments and Taxation Form
  • Repair Facility Contract
  • Dealer Orientation Request

You will also need to:

  • Provide proof of Workers’ Compensation insurance
  • Provide proof of liability insurance for the vehicles you will be selling
  • Undergo a criminal background check
  • Arrange for a site inspection
  • Purchase a Maryland car dealer bond
  • Submit your completed application package with all required supporting documents and fees to the MVA Business Licensing and Consumer Services (BL&CS) Division in Glen Burnie
  • Attend the dealer orientation session once your request is approved

Maryland car dealer licenses are good for two years.

Why is a Maryland Car Dealer Bond Required?

A Maryland car dealer bond is a type of license and permit surety bond that is a dealer’s guarantee to operate in compliance with all applicable Maryland laws governing vehicle sales.  Any violation of those laws that causes financial harm to the state (such as failure to pay taxes and fees) or to a consumer (such as misrepresenting the condition of a vehicle or tampering with the odometer) can result in a claim against the bond. 

Every vehicle dealer must always have an active bond in force to avoid license suspension or revocation.

How Are Maryland Car Dealer Bond Claims Paid?

The surety bond agreement for a Maryland car dealer bond is a legally binding contract that involves thee parties known in surety bond lingo as the “obligee,” the “principal,” and the “surety.”

  • The obligee is MVA.
  • The principal is the dealer.
  • The surety is the company guaranteeing the bond.

The terms of the surety bond agreement indemnify the obligee and the surety against liability for claims and legally obligates the principal to pay them. However, the surety guarantees the payment of claims by the principal, so unless the principal pays a valid claim right away, the surety will step in and pay it. That initial payment on behalf of the principal is not a gift, however, and the principal is required by law to repay that debt to the surety.

How Much Does a Maryland Car Dealer Bond Cost?

The cost of a Maryland car dealer bond is determined by two factors: the required bond amount established by the obligee and the premium rate set by the surety on a case-by-case basis. 

The required bond amount (also known as the bond’s “penal sum”) is based on the number of vehicles sold by the principal during the previous 12 months and ranges from $15,000 to $150,000 for used car dealers. 

The premium rate reflects the surety’s assessment of the risk inherent in paying claims on behalf of the principal and waiting for repayment. That assessment is based on the principal’s personal credit score. Those with the best credit will be assigned the best (lowest) premium rate, potentially as low as one percent.  

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