New Mexico Auto Dealer Bonds

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 New Mexico auto dealer bond needs.


What Are They?

New Mexico auto dealer bonds play an important role in maintaining the integrity of the state’s auto sales industry. They require licensed auto dealers to do business ethically and lawfully, in full compliance with applicable rules and regulations. 

But full compliance is a high bar, and there will always be those who commit regulatory violations. When that happens, and a licensed dealer’s actions cause financial harm to the state or the public, the injured party can file a claim against the bond and be compensated for their loss.


Who Needs Them?

The New Mexico Motor Vehicle Division licenses auto dealers to operate within the state and requires applicants to provide a New Mexico auto dealer bond as a mandatory step in the licensing process. Dealers selling motor vehicles must purchase a $50,000 bond, but the required bond amount for motorcycle dealers is only $12,500. 

The bond must never be allowed to expire, because there must be an active bond in force at all times to prevent revocation of the dealer’s license.

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.


How Do They Work?

Every New Mexico auto dealer bond is a legally binding contract among three parties:

  • The party requiring the bond and known as the bond’s “obligee” is the New Mexico DMV.
  • The party required to purchase the bond and known as the bond’s “principal” is the dealer.
  • The party guaranteeing the bond is known as the “surety.”

Here’s an example of what can happen when the principal commits a violation: let’s say you concealed the fact that a used vehicle had previously been submerged in floodwaters, then sold it to a buyer. The dealer’s deceit ends up costing the buyer thousands of dollars, which she hopes to recover by filing a claim against the New Mexico auto dealer bond. The surety investigates and finds the claim to be valid.

The terms of the surety bond agreement legally obligate the principal to pay all valid claims, but the surety has guaranteed the payment of claims and typically will pay a claim initially; to be reimbursed later by the principal as per their agreement. The surety has the right to sue a principal who fails to repay that debt.


What Do They Cost?

The annual premium rate for a New Mexico auto dealer bond can be anywhere from less than 1% to more than 10%, depending on the principal’s personal credit score.  The surety’s main concern is the risk of not being repaid for claims paid on the principal’s behalf. A great credit score suggests a low risk to the surety, which deserves a low premium rate, while a poor credit score is a sign of a much higher risk level, which warrants a much higher premium rate. 

The premium rate can range from less than 1% to 2-3% or more, which makes a big difference in what someone will pay to purchase a new bond or renew one that’s expiring.


Get a Quote

Our surety bond professionals will get you the New Mexico auto dealer bond you need at a competitive rate.