Minnesota Auto Dealer Bond

The cost of a Minnesota 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 Minnesota. You'll receive an email copy of the bond, and you can request a paper copy if necessary.

4. File your bond with the Driver and Vehicle Services

Submit your bond as part of your dealer license application to the Minnesota Department of Public Safety, Driver and Vehicle Services.

Filing address:

Minnesota Department of Public Safety Driver and Vehicle Services 445 Minnesota Street, Suite 186 St. Paul, MN 55101-5186

The Minnesota Department of Public Safety requires all of the following to post a surety bond before receiving a license.

• Motor vehicle dealers - Anyone who sells or leases 5 or more vehicles within a 12-month period must be licensed. This includes new vehicle dealers, used vehicle dealers, and franchise dealers. A $50,000 bond is required.
• Motor vehicle brokers - Brokers who arrange the sale or lease of motor vehicles between buyers and sellers must carry a $50,000 bond.
• Wholesalers & auctions - Wholesale dealers and auction dealers must each carry a $50,000 bond, regardless of whether selling to the public.
• Motor vehicle lessors - Businesses that lease new or used motor vehicles must carry a $50,000 bond.
• Salvage pool dealers - Dealers who operate salvage pools must carry a $50,000 bond.
• DSB dealers - DSB dealers who sell motorized bicycles, boat trailers, snowmobile trailers, horse trailers, or qualifying small equipment trailers may qualify for the reduced $5,000 bond.
• Consignment and parts dealers - Those engaged in consignment sales or used vehicle parts sales must meet the bonding requirements based on their specific license type.

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 the Minnesota Motor Vehicle Dealer Law (Minnesota Statute 168.27)

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

Minnesota 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 for bond cancellation notice, but you should maintain continuous coverage.

Minnesota 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 Minnesota auto dealer license requires meeting several requirements set by the Minnesota Department of Public Safety's Driver and Vehicle Services division. The licensing process is governed by Minnesota Statute 168.27 and Minnesota Rules 7400.0100 through 7400.6000.

Key requirements include:

• Surety bond ($50,000 or $5,000, depending on license type)
• Liability insurance on all vehicles held for sale
• Commercial building at a permanent location
• Zoning approval from local authorities
• Proof of property ownership or lease agreement
• Workers' compensation insurance (if you have employees)
• Application fee ($250 for dealer license, plus additional fees for demo plates and in-transit plates)

Important note: If you operate in a city outside the seven-county Twin Cities metro area and in a city with fewer than 100,000 residents, you must also acquire a separate license from that city in addition to the state license.

You can find detailed information and application forms on the Minnesota Department of Public Safety Driver and Vehicle Services website or contact the Dealer Unit at (651) 201-7800 or [email protected].

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

How long does it take to get a Minnesota 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 Minnesota Department of Public Safety 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 Minnesota 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 the Minnesota Motor Vehicle Dealer Law and cannot legally sell vehicles. The Minnesota Department of Public Safety can suspend or revoke your dealer license for operating without an active bond. Surety companies are required to notify the Department when cancelling coverage, and you must replace the bond before the cancellation date to avoid license suspension.

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 30-day 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 separate bond for each dealership location?

Generally yes. Each licensed dealership location in Minnesota requires its own dealer license and 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.