New Hampshire Auto Dealer Bond

A New Hampshire auto dealer bond, formally called a Motor Vehicle Dealer Bond, is a surety bond required by the New Hampshire Division of Motor Vehicles before your dealership license can be issued.

It is a financial guarantee that your dealership will operate in compliance with New Hampshire law and deal honestly with customers. If you fail to do so, a harmed customer may be able to make a claim against your bond to recover covered losses.

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

Every surety is a contract between 3 parties:

• The Obligee: New Hampshire Department of Safety, Division of Motor Vehicles
  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 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 New Hampshire. You’ll receive an email copy of the bond, and you can request a paper copy if necessary.

4. File your bond with the New Hampshire DMV

Submit your original bond as part of your dealer license application to the New Hampshire Division of Motor Vehicles.

Filing address:

New Hampshire Division of Motor Vehicles
 Dealer Desk
 23 Hazen Drive
 Concord, NH 03305

New Hampshire law requires several dealer license types to maintain a $25,000 surety bond or approved financial responsibility alternative under RSA 261:98. The following dealer types commonly need a bond before receiving a license.
 

• Retail vehicle dealers - Any person selling 5 or more motor vehicles at retail to the general public in a consecutive 12-month period must hold the proper dealer license and file the required $25,000 bond.
• Auto wholesale dealers - Wholesale dealers selling to other licensed motor vehicle dealers must submit an original $25,000 dealer surety bond in the legal business name and address.
• Motorcycle dealers - Motorcycle dealers who sell 5 or more motorcycles in a 12-month period are listed by the DMV with the same original $25,000 dealer bond requirement.
• Automotive recycling dealers - Auto recycling dealers must submit an original $25,000 dealer surety bond in the business name and legal business address.
• Utility dealers - Certain utility dealers, including those selling larger trailers or utility vehicle categories, must post a $25,000 bond when required by the DMV.
• Repair dealers selling vehicles - A repair dealer applying for a dealer license to sell vehicles must submit the required $25,000 dealer surety bond.

The bond protects consumers and certain public entities from specific financial losses listed under RSA 261:98. A claim can involve any of the following covered violations:
 

• Default or nonpayment of valid bank drafts, including checks, drawn by the dealer for the purchase of motor vehicles
• Failure to deliver a valid motor vehicle title certificate that is free and clear of prior owners’ interests and liens, except liens the buyer accepts in writing
• Selling a motor vehicle that was stolen
• Intentional or knowing failure to disclose the vehicle’s actual mileage at the time of sale
• Failure to collect or pay official registration, permit, registration transfer, or title fees when applicable

The maximum payout under the standard dealer bond is the bond’s penal sum: $25,000. After any payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• Consumer, town, city, or state claimant contacts the surety company directly to file a claim
• The surety investigates the claim to determine its validity
• For recovery under New Hampshire law, the claimant generally must obtain a final judgment against the dealer for a covered act or omission
• If the claim is valid, the surety pays the claimant up to the bond’s penal sum ($25,000)
• 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

New Hampshire dealer licenses renew on March 31 of every even-numbered year, and your bond must remain active for as long as your license is active.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. Even if the dealer license cycle is biennial, your bond premium is typically paid annually unless you purchase a multi-year term.

New Hampshire dealer bonds can usually be continued from year to year by paying the renewal premium. You typically won’t need to file a new bond each year unless you change surety providers or your bond information changes.

If a surety cancels the bond, New Hampshire law requires 60 days’ written notice to both the department and the dealer. At renewal, the surety company will review your credit. Maintaining a strong credit profile can help keep your premium costs low.

Getting a New Hampshire auto dealer license requires submitting the correct application and supporting documents to the New Hampshire Division of Motor Vehicles. 

Requirements vary by dealer type, but the application package commonly includes the following:
 

• Application form
• $25,000 surety bond issued in the exact legal business name and physical address
• An established place of business approved by local and state authorities
• Posted business hours that meet the DMV requirement for your license type
• Original Service Agreement
• Criminal background check
• Completion of a title/dealer class when required
• Business entity documents and proof of good standing from the New Hampshire Secretary of State
• Applicable license fee

For more information on how to get the license, check our guide: New Hampshire dealer license guide

How long does it take to get a New Hampshire 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 the DMV needs an original bond with your license package.

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 under the bond — $25,000 for the standard New Hampshire dealer bond. 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. So a $25,000 bond typically costs $250–$2,500 per year depending on credit and underwriting factors.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with New Hampshire dealer licensing requirements. The DMV can treat the license as noncompliant if the required bond is cancelled or not maintained, so you should replace or reinstate the bond before continuing licensed dealer activity.

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 New Hampshire dealer bond, they must give 60 days’ written notice to both the DMV and the dealer. Once the bond is cancelled, your dealer license may be affected unless replacement coverage is filed.

Do I need a separate bond for each dealership location?

New Hampshire law requires a separate bond for each community where the dealer has a place of business. If you operate in multiple towns or cities, or under different business names, check with the DMV before assuming one bond covers every location.

Can I use a certificate of deposit or letter of credit instead of a surety bond?

New Hampshire law allows the department to accept approved alternative proof of financial responsibility, such as a certificate of deposit or irrevocable letter of credit, with a face value equal to the required bond amount. Most dealers use a surety bond because it is usually faster and less capital-intensive.