South Carolina Auto Dealer Bond

A South Carolina auto dealer bond, formally called a Motor Vehicle Dealer and Wholesaler Surety Bond, is required by the South Carolina Department of Motor Vehicles (SCDMV) before your dealer or wholesaler license can be issued.

It is a financial guarantee that your dealership will follow South Carolina dealer laws and deal honestly with customers. If you fail to do so, a harmed customer can 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: South Carolina Department of Motor Vehicles. The state authority that requires the bond as a condition of licensing. The SCDMV sets the bond amount and prescribes the bond form (DLA-1B).
• The Principal: you, the dealer or wholesaler. You purchase the bond and are bound by its terms. If a valid claim is paid, you must reimburse the surety.
• The Surety: the surety company that issues the bond. The surety guarantees payment to claimants up to the bond amount if you default on your obligations. South Carolina requires the bond to be executed by a corporate surety company authorized to do business in the state. 

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 South Carolina. You’ll receive an email copy of the bond, and you can request the original paper bond when needed for SCDMV filing.

4. File your bond with the SCDMV Business License Unit

Submit your original bond and Power of Attorney with your dealer or wholesaler license application to the South Carolina Department of Motor Vehicles Business License Unit.

Filing address:

South Carolina Department of Motor Vehicles
 Business License Unit
 P.O. Box 1498
 Blythewood, SC 29016-0023

The South Carolina Department of Motor Vehicles requires the following license applicants to post a surety bond before receiving a license.

• Retail motor vehicle dealers - Retail dealers must carry a $50,000 Motor Vehicle Dealer and Wholesaler Surety Bond.
• Wholesale motor vehicle dealers - Wholesale dealers fall under the same $50,000 bond requirement.
• Recreational vehicle dealers - Recreational vehicle dealers also need a $50,000 bond.
• Motorcycle dealers - Motorcycle dealers must carry a $25,000 bond.
• Motorcycle wholesalers - Motorcycle wholesale dealers must carry a $25,000 bond.
• Wholesale auto auction dealers - Wholesale auction dealers must carry a $15,000 bond. 

The bond protects consumers from financial loss caused by dealer fraud, fraudulent representation, or other violations of South Carolina dealer law. A claim can be filed for any of the following violations:

• Fraud or fraudulent representation in the sale or transfer of a motor vehicle
• Violating Title 56 requirements related to motor vehicle dealers and vehicle sales
• Failing to handle titles, registrations, taxes, or fees properly
• Misrepresenting a vehicle's condition, ownership, mileage, or sale terms
• Any other covered loss or damage caused by the dealer, wholesaler, or their representatives

The maximum payout per bond is the bond's penal sum: $50,000 for most dealer and wholesaler licenses, $25,000 for motorcycle dealer and motorcycle wholesaler licenses, and $15,000 for wholesale auction licenses. After any payout, you as the principal are liable to reimburse the surety.

How the Claims Process Works?

• A consumer or claimant contacts the surety company directly to file a claim. Under the terms of the DLA-1B bond, the injured party does not need to obtain a judgment against the dealer before making a claim against the surety.
• 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 or wholesaler (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 

A bond claim is separate from a complaint filed with the state. Consumers can also file a complaint against a dealer with the SCDMV using Form DE-002C, which the SCDMV routes to its Audit and Compliance Unit and may result in sanctions against your license.

South Carolina dealer and wholesaler licenses expire 36 months from the month of issue. Wholesale auction dealer licenses are valid for one year only.

Even though most dealer licenses are valid for three years, South Carolina requires a new bond or a proper continuation certificate every 12 months during the license period, under S.C. Code § 56-15-320(B)(2).

You or your surety must also notify the SCDMV of any bond name or address change within 30 days of the change. In practice, that means submitting a bond rider along with your updated application.

Since October 2024, the SCDMV has processed dealer license renewals online only. Bonds, bond riders, and Powers of Attorney must still be mailed to the Business License Unit at the address above.

Lance Surety will contact you well in advance of your renewal date to help prevent any lapse in coverage. If your bond expires, terminates, or drops below the required amount, your dealer license can expire immediately.

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

Getting a South Carolina auto dealer license is a detailed process. The SCDMV requires applicants to submit the dealer or wholesaler license application, an employee list, a diagram of the business location, the correct surety bond and Power of Attorney, and other supporting documents based on the license type. Most retail dealers must also complete an eight-hour pre-licensing course, though franchised dealers, recreational vehicle dealers, wholesalers, auto auctions, and motorcycle dealers are exempt. Garage liability insurance is required if you are requesting dealer plates.

You can find the full checklist on the South Carolina Department of Motor Vehicles website.

For more information on how to get the license, check our guide: South Carolina dealer license

How long does it take to get a South Carolina dealer bond?

For most applicants, bonds are issued the same day — often within minutes of completing the application. You can receive a digital copy by email, but first-time SCDMV filings may require the original bond and Power of Attorney, so request a paper original when needed.

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 South Carolina dealer and wholesaler 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. So a $50,000 bond may cost $500–$1,500 per year for applicants with strong credit.

What happens if my bond lapses?

If your bond lapses, you are no longer in compliance with South Carolina dealer licensing requirements and cannot legally continue operating under an active dealer license. Under S.C. Code § 56-15-320(B)(3), a dealer's license expires immediately upon the expiration, termination, or decrease of the dealer's bond below the required penal sum, $50,000 for dealer and wholesaler licenses. The expiration is immediate, and there is no grace period.

Can my bond be cancelled?

Yes, a surety bond can be cancelled — either by you or by the surety company. Before the bond can be cancelled, the surety must give the South Carolina Department of Motor Vehicles 30 days’ written notice. Cancellation does not affect liability that was incurred before the cancellation date.

Do I need a bond for every salesperson I employ?

No. South Carolina does not require a separate salesperson bond for each employee. The dealer or wholesaler bond is attached to the licensed business and covers qualifying acts by the dealer, salesmen, or representatives acting within the scope of employment.

Do I need a separate bond for each dealership location?

Yes. If you have multiple licensed locations in South Carolina, you must apply for a separate license and maintain a separate surety bond for each location.