Missouri Auto Dealer Bond

A Missouri auto dealer bond, formally called a Motor Vehicle Dealer Bond, is a surety bond required by the Missouri Department of Revenue Motor Vehicle Bureau before your dealership license can be issued. The requirement comes from Section 301.560.1(3), RSMo, which sets the bond at a penal sum of $50,000 on a form approved by the department's dealer licensing section.

It is a financial guarantee that your dealership will operate in compliance with Missouri law and deal honestly with customers. If you fail to do so, a harmed customer can recover their losses against your bond.

Unlike insurance, which protects you, a surety bond primarily protects your customers and the state. The bond indemnifies any loss caused by your acts when those acts are grounds for suspension or revocation of your dealer license. If a claim is paid out, you are responsible for reimbursing the surety company.

Every surety is a contract between 3 parties:

• The Obligee: Missouri Department of Revenue, Motor Vehicle Bureau - The state authority that requires the bond as a condition of licensing. They set 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 dealership, 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 Motor Vehicle Bureau

Submit your bond as part of your dealer license application to the Missouri Department of Revenue, Motor Vehicle Bureau. Most dealers apply and upload supporting documents through the state's online portal at MyDMV.mo.gov. Paper applications are mailed to:

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

The Missouri Department of Revenue, Motor Vehicle Bureau requires a $50,000 corporate surety bond or irrevocable letter of credit from the following license types before a license will be issued.

• Motor vehicle dealers - New and used vehicle dealers, franchise dealers, and recreational vehicle dealers. A $50,000 bond is required regardless of whether you sell new, used, or wholesale.
• Powersports dealers - Dealers selling primarily motorcycles, autocycles, ATVs, and similar vehicles carry the same $50,000 bond.
• Wholesale motor vehicle dealers - Dealers who sell only to other licensed new or used dealers, or through auctions limited to dealers. A wholesale dealer cannot make retail sales and carries the full $50,000 bond.  
• Trailer dealers - Trailer dealers carry the full $50,000 bond. There is no reduced bond amount or weight-based exemption for trailer dealers in Missouri.
• Boat dealers - Boat dealers are licensed and bonded at $50,000 under Section 301.560.1(3), RSMo. 
• Emergency vehicle dealers - Also required to file the $50,000 bond.

Three license types are exempt from the bond requirement: wholesale motor vehicle auctions, public motor vehicle auctions, and manufacturers. Note the distinction from above, a wholesale motor vehicle dealer buys and sells vehicles and must be bonded, while a wholesale motor vehicle auction only provides auction services and never buys, sells, or owns the vehicles it auctions. Because no title passes through the auction, there is no transaction for the bond to cover.

The bond is an indemnity for any loss a person sustains because of your acts, when those acts constitute grounds for suspension or revocation of your dealer license. In practice, that includes conduct such as:

• Selling a vehicle with no title, a fraudulent title, or failing to properly assign and transfer title
• Misrepresenting a vehicle's condition, accident history, or mileage
• Retaining customer deposits without delivering the vehicle
• Failing to maintain records or file the required monthly sales reports
• Any other violation of Missouri's dealer licensing law, Sections 301.550 to 301.580, RSMo

Missouri's claims process is stricter than most states', and this is the most commonly misunderstood part of the bond. Bond proceeds are not released on the surety's own investigation. Under Section 301.560.1(3), RSMo and the language printed on the state's approved bond form, proceeds are paid only when the Department of Revenue receives a final judgment from a Missouri court of competent jurisdiction against the dealer and in favor of the aggrieved party.

The surety's aggregate liability to all claimants during any one license year cannot exceed the penal sum of the bond. After any payout, you as the principal are liable to reimburse the surety in full.

How the Claims Process Works?

• The consumer or claimant must sue the dealer and obtain a final judgment in a Missouri court of competent jurisdiction
• The judgment is submitted to the Missouri Department of Revenue
• On receipt of that judgment, the proceeds of the bond are paid to the aggrieved party
• Total payouts to all claimants in any one license year are capped at the penal sum
• The dealer is then required to reimburse the surety for any amounts paid out
• Claims on your record will significantly increase your bond premium at renewal

There is one exception to the judgment requirement. For delayed-title sales under Section 301.210, RSMo, the department can direct payment without a court judgment, based on the written agreement, the sales and finance documents, and the buyer's or lienholder's affidavit, provided the vehicle has been returned to the dealer or the buyer has agreed to surrender it. If you want to contest such a claim or the amount, you have thirty days from the buyer's or lienholder's notification to petition a court.

Missouri dealer licenses and dealer plates expire on December 31 of the license expiration year. Licenses are renewed annually for the first three years of operation, and every two years after that.

Missouri law provides no grace period. Once your license expires, you cannot operate as a dealer, and you must title and pay tax on every motor vehicle, trailer, or boat you buy and sell during any period you are not licensed, including vehicles held for resale.

Your bond has to keep pace with your license. Any bond on file must be in effect through December 31 of the licensure year, or be issued as a "non-expiring" bond. If the bond or letter of credit on file expires or is cancelled, a replacement must be submitted to the department on or before the date of expiration or cancellation.

Renewal also depends on sales volume: Section 301.550, RSMo requires a dealer to sell eight or more motor vehicles or trailers in each full calendar year licensed to be eligible for renewal the following year.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. At renewal, the surety company will review your credit, maintaining a strong credit profile can help keep your premium costs low.

Getting a Missouri 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 Missouri Department of Revenue's website.

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

How long does it take to get a Missouri 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. Because the Department of Revenue accepts supporting documents uploaded through its online portal, you can file your bond as soon as you receive it. 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 Missouri dealer licenses, or $100,000 for dealers who deliver vehicles directly to purchasers. 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 Missouri's dealer licensing law and cannot legally sell vehicles. Missouri law provides no grace period, and the Department of Revenue can suspend or revoke your dealer license for operating without an active bond. During any period you aren't licensed, you must title and pay tax on every vehicle, trailer, or boat you buy and sell. If a license stays expired long enough, the state will require you to apply for a new business license rather than renew the old one, so replace a lapsing bond before the expiration date, not after.

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?

No. Missouri does not require a separate surety bond for individual salespersons. Salespersons are covered under the dealership’s bond. The $50,000 bond covers the entire dealership and its operations.

Do I need a separate bond for each dealership location?

Generally yes. Each licensed dealership location in Missouri 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.