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 Missouri car dealer bond needs. Learn how to get a Missouri car dealer license and contact us today to request a quote on the bond you need.
What Are the Different Types of Missouri Car Dealer Licenses?
The Missouri Department of Revenue (DOR) issues four main types of vehicle dealer licenses:
- Motor Vehicle Dealer license (for dealers selling new vehicles, including recreational vehicles, from more than one manufacturer)
- Franchised New Motor Vehicle Dealer license (for dealers with a franchise agreement to sell only a specific make of vehicle)
- Wholesale Motor Vehicle license (for dealers selling only to other businesses)
- Used Motor Vehicle Dealer license (for dealers selling any used vehicles)
This article focuses on the licensing of used car dealers.
What Are the Steps in the Licensing Process?
In preparation for applying for initial licensing as a Missouri used motor vehicle dealer, you will need to:
- Register your business with the IRS and with DOR for taxation purposes
- Secure a permanent location for your dealership that meets state requirements and get local zoning approval
- Purchase garage liability insurance
- Obtain a criminal background check and a hard copy of the results from the Missouri State Highway Patrol’s Missouri Automated Criminal History Site (MACHS)
- Attend a dealer education seminar approved by DOR
- Purchase a $25,000 Missouri car dealer bond (or provide and irrevocable letter of credit in that amount)
You can use the fillable PDF license application or apply online. In either case, you will need to provide all required supporting documentation and pay the license fee (currently $150) and dealer plate fees ($50 for the first four plates). Your dealership location will need to be inspected by a law enforcement officer before your license application will be approved.
Why is a Missouri Car Dealer Bond Required?
Most dealers choose to purchase a Missouri car dealer bond rather than tie up their assets in an irrevocable letter of credit. The purpose of the bonding requirement is to protect the state and consumers against financial loss stemming from a licensed dealer’s noncompliance with state laws governing motor vehicle sales. In purchasing a bond, dealers are pledging to operate within the confines of those laws and accepting the legal obligation to compensate claimants for damages caused by their failure to do so.
How Are Missouri Car Dealer Bond Claims Paid?
There are three parties to the legally binding surety bond agreement for a Missouri car dealer bond:
- The Department of Revenue, Motor Vehicle Division—the “obligee” requiring the bond
- The dealer—the “principal” purchasing the bond and legally obligated to pay valid claims against it
- The company guaranteeing the payment of claims—the “surety”
When a claim is received, the surety will investigate to make sure it’s valid and then will pay it on behalf of the principal. But the surety’s initial payment of a claim does not relieve the principal of the legal obligation to pay it. It simply transfers that obligation to repayment of the surety. Failure to repay the debt created by the surety’s initial payment of a claim can result in the surety taking legal action against the principal.
How Much Does a Missouri Car Dealer Bond Cost?
Missouri car dealer bonds are subject to underwriting to determine the premium rate. The primary underwriting concern is the degree of risk that paying claims on behalf of the principal entails—specifically the risk that the principal won’t repay the surety.
That risk is measured by the principal’s personal credit score, financial stability, and other indicators of creditworthiness. A principal with good credit could be assigned a premium rate as low as one percent, which would result in an annual bond premium of only $250. A principal with poor credit will likely pay a higher premium rate.
Our surety bond professionals will get you the Missouri car dealer bond you need at a competitive rate.