Kansas Auto Dealer Bond

A Kansas auto dealer bond, formally called a Kansas Vehicle Dealer Bond, is a surety bond required by the Kansas Department of Revenue Division of Vehicles before a dealer license can be issued.

It is a financial guarantee that your dealership will operate in compliance with Kansas law and deal honestly with retail and wholesale buyers and sellers. If you fail to do so, a harmed party can make a claim against your bond to recover losses.

Unlike insurance, which protects you, a surety bond primarily protects your customers, other vehicle buyers or sellers, and the state. If a valid claim is paid out, you are responsible for reimbursing the surety company.

Every surety bond is a contract between 3 parties:

• The Obligee: State of Kansas / Kansas Department of Revenue Division of Vehicles
  The state authority that requires the bond as a condition of licensing. It sets the bond amount and terms.
   
• The Principal: You, the dealer
  You purchase the bond and are bound by its terms. If a valid claim is paid, you must reimburse the surety.
   
• The Surety: such as Lance Surety Bonds
  We underwrite the bond and guarantee payment to claimants up to the bond amount if you default on your obligations.

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 24–48 hours.

3. Purchase Your Bond

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

4. File Your Bond with the Dealer Licensing Bureau

Submit your bond as part of your dealer license application to the Kansas Department of Revenue Dealer Licensing Bureau. Kansas forms may require the original signed bond, so confirm filing instructions before mailing your packet.

Filing address:

Kansas Department of Revenue

Division of Vehicles

Dealer Licensing Bureau

P.O. Box 2369

Topeka, KS 66601-2369

Kansas requires vehicle dealers to be licensed before engaging in business in the state. The $50,000 surety bond applies to applicants or licensees who are, or apply to be, new vehicle dealers or used vehicle dealers.
 

• New vehicle dealers - Dealers selling new vehicles under a franchise agreement must maintain the required $50,000 Kansas vehicle dealer bond.
• Used vehicle dealers - Dealers actively buying, selling, or exchanging used vehicles must maintain the required $50,000 bond.
• Dealers selling 5 or more vehicles - Selling 5 or more motor vehicles in a calendar year is treated as evidence that you are engaged in the business of selling vehicles and need a dealer license.
• Dealers buying vehicles for resale - If you buy vehicles with the intent to resell them for profit, you may need a Kansas dealer license and bond even before reaching 5 sales.
• Salespersons - Kansas salespersons have separate licensing rules, but the state bonding requirement does not apply to salespersons.
• Manufacturers and factory representatives - Kansas law also excludes first and second stage manufacturers, factory branches, factory representatives, and certain related parties from the dealer bonding requirement.

The bond protects consumers and other vehicle buyers or sellers from financial loss caused by dealer violations of Kansas law. 

A claim can be filed for issues such as:
 

• Selling a vehicle without clear title or failing to transfer title properly
• Misrepresenting a vehicle’s condition, accident history, or mileage
• Failing to honor a valid sale agreement or retaining funds improperly
• Failing to follow Kansas dealer licensing laws or tax-related requirements
• Any other act that could be grounds for suspension, revocation, refusal to renew a license, or administrative action

The maximum payout is the bond’s penal sum: $50,000. After any valid payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• A 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
• The dealer is then required to reimburse the surety for any amounts paid out
• Claims on your record can significantly increase your bond premium at renewal

Kansas dealer licenses expire on December 31 of the calendar year for which they are granted, unless suspended or revoked earlier. Your bond must remain active for as long as you hold your dealer license.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. If your annual premium is not paid, your surety company may cancel the bond and your Kansas dealer license may be suspended.

Kansas dealer bonds are continuous, meaning the original bond remains active until it is cancelled. The surety can cancel the bond only by giving 30 days’ written notice to the Kansas Department of Revenue Division of Vehicles.

At renewal, the surety company will review your credit and risk profile. Maintaining strong credit and avoiding claims can help keep your premium costs lower.

Getting a Kansas auto dealer license is handled through the Kansas Department of Revenue Division of Vehicles Dealer Licensing Bureau. The state requires an established place of business and supporting documents before your license can be issued.

You can find the official requirements and application forms on the Kansas Department of Revenue Dealer Licensing page.

Common requirements include:
 

• Completed vehicle dealer license application
• $50,000 Kansas vehicle dealer bond
• Sales tax registration number
• Certificate of Tax Clearance
• Established place of business with proper signage and an operable phone
• Zoning approval and required location photos
• Insurance coverage for the business and inventory
• Business formation documents, if applicable

For more information on how to get the license, check our guide: Kansas auto dealer license 

How long does it take to get a Kansas 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, and you can request a paper copy if Kansas filing requirements call for an original signed bond.

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

The bond amount is the maximum protection offered to claimants — $50,000 for Kansas vehicle dealers. 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. For many qualified applicants, that means $500–$1,500 per year.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with Kansas dealer licensing requirements and your dealer license may be suspended. You should renew your bond before the premium due date so there is no gap in coverage.

Can my bond be cancelled?

Yes, a surety bond can be cancelled. In Kansas, the surety must give 30 days’ written notice to the Kansas Department of Revenue Division of Vehicles before cancellation takes effect. If your bond is cancelled, your dealer license can be affected.

Do Kansas salespersons need a separate bond?

No. Kansas law states that the bonding requirements do not apply to salespersons. Salespersons have separate licensing requirements, but they do not need a separate Kansas dealer bond.

Do I need a separate bond for each dealership location?

The bond should match the licensed dealer entity and the information on your Kansas application. If you operate more than one location, supplemental locations must be approved and properly listed with the state. Contact Kansas Dealer Licensing or Lance Surety if you need help matching your bond to multiple locations.