Colorado Auto Dealer Bond

The cost of a Colorado auto dealer bond starts at $500. Bond premiums are typically between 1% and 3% of the bond amount — so between $500 and $1,500 per year for the standard $50,000 dealer bond.

It's important to understand the difference between the bond amount and what you actually pay. The $50,000 is the maximum a claimant can recover against your bond — it's the coverage limit set by the state, not your cost. What you pay is the annual premium, which is a small percentage of that amount.

Your premium is quoted individually based on three factors: your personal credit score (the biggest driver), your experience in the industry, and any prior bond claims on your record. Because each surety company weighs these factors differently, the same applicant can receive meaningfully different quotes from different underwriters

Even applicants with poor credit can get bonded. A lower credit score means a higher premium, not a denial.

Here’s a breakdown of the bond requirements and the premium costs based on your credit score.

1. Submit Your Bond Application

You can apply for your bond online. Just enter some basic information about yourself and your business, and you should be able to submit your application within a matter of minutes. If you have any questions, we are more than happy to assist you.

2. Get a Quote

At Lance Surety Bonds, we want to provide you with the best premium rate possible. For most applicants with a strong credit history, a quote is ready within minutes. More complex applications may take up to 24 hours.

3. Purchase Your Bond

Once you receive your quote, you can pay the bond premium and you’re officially bonded in Colorado. You’ll receive an email copy of the bond, and you can request a paper copy if necessary.

4. File your bond with the Auto Industry Division 

Submit your bond as part of your dealer license application to the Colorado Department of Revenue Auto Industry Division.

Filing address:

Colorado Department of Revenue
Auto Industry Division
1707 Cole Blvd., Suite 300
Lakewood, CO 80401

The Colorado Motor Vehicle Dealer Board requires all of the following to post a surety bond before receiving a license.

• Motor vehicle dealers - New and used vehicle dealers, including franchise dealers. Selling new, used, or wholesale? A $50,000 bond is required regardless.
• Powersports dealers - ATVs, dirt bikes, snowmobiles and other power sports vehicles fall under the same requirement a $50,000 bond applies.
• Wholesalers & auctions - Wholesale dealers and wholesale auto auction operators must each carry a $50,000 bond, regardless of whether selling to the public.
• Salespersons - Each individual salesperson requires a separate $15,000 bond. Bonds are attached to the person, not the position, a replacement hire needs a new bond.
• Small trailer dealers - Dealers who sell only trailers weighing ≤ 2,000 lbs qualify for a reduced $5,000 bond. This exception does not apply if you sell any other vehicle type.
• Buyer agents - Agents licensed to purchase vehicles on behalf of consumers must carry a $5,000 buyer agent bond.

The bond protects consumers from financial loss caused by dealer fraud or negligence. A claim can be filed for any of the following violations:

• Selling a vehicle with no title, a fake title, or failing to transfer title properly
• Misrepresenting a vehicle's condition, accident history, or mileage
• Retaining customer deposits without delivering the vehicle
• Failing to record vehicle sales or pay the correct amount of sales tax
• Any other breach of Colorado Motor Vehicle Dealer Law

The maximum payout per bond is the bond's penal sum: $50,000 for most dealer licenses. After any payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• Consumer or claimant contacts the surety company directly to file a claim
• The surety investigates the claim to determine its validity
• If the claim is valid, the surety pays the claimant up to the bond's penal sum ($50,000)
• The dealer (principal) is then required to reimburse the surety for any amounts paid out
• Claims on your record will significantly increase your bond premium at renewal

Colorado auto dealer licenses are valid for 12 months from the date of approval, and your bond must be renewed alongside your license.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. There is a 30-day grace period, but penalties may apply after that.

Colorado dealer bonds are issued on a continuous basis, meaning the original bond remains active as long as the annual premium is paid. You typically won’t need to file a new bond each year unless you change surety providers.

At renewal, the surety company will review your credit. Maintaining a strong credit profile can help keep your premium costs low.

Getting a Colorado auto dealer license is a detailed process. The Colorado Department of Revenue's Auto Industry Division outlines 26 steps to complete before your license is issued — from meeting the net worth and credit requirements to passing the Mastery Exam and securing your surety bond.

You can find the full checklist on the Colorado Department of Revenue's website.

For more information on how to get the licence check our guide: Colorado auto dealer license

How long does it take to get a Colorado dealer bond?

For most applicants, bonds are issued the same day — often within minutes of completing the application. Your bond is delivered digitally by email. The Colorado Motor Vehicle Dealer Board accepts a scanned or photocopied bond, so you can file it immediately. If you need a paper original, we'll mail it to you.

What is the difference between the bond amount and the bond premium?

The bond amount (also called the penal sum) is the maximum protection offered to consumers — $50,000 for most Colorado dealer licenses. This is not what you pay. The bond premium is the annual cost you pay to purchase the bond, which is a percentage of the bond amount — typically 1–3% for applicants with good credit. So a $50,000 bond costs $500–$1,500 per year.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with Colorado Motor Vehicle Dealer Law and cannot legally sell vehicles. The Colorado Motor Vehicle Dealer Board can suspend or revoke your dealer license for operating without an active bond. There is a 30-day grace period after your renewal date, but you should not rely on it — reinstatement can be a lengthy process and may require reapplying for your license from scratch.

Can my bond be cancelled?

Yes, a surety bond can be cancelled — either by you or by the surety company. If the surety cancels your bond (typically due to non-payment or a significant change in your risk profile), they are required to give advance written notice to both you and the obligee. Once your bond is cancelled, your dealer license is no longer valid. If you need to cancel your bond voluntarily — for example, because you're closing your dealership — contact us directly to handle it properly and avoid any penalties.

Do I need a bond for every salesperson I employ?

Yes. Colorado requires a separate $15,000 surety bond for every licensed salesperson at your dealership. The bond is attached to the individual, not the role, so if a salesperson leaves and you hire a replacement, you must purchase a new bond for the new hire

Do I need a separate bond for each dealership location?

Generally yes. Each licensed dealership location in Colorado requires its own bond. If you operate multiple locations under separate dealer licenses, each license needs a bond attached to it. Contact us if you operate multiple locations — we can help you manage bonding across all of them efficiently.