Delaware Auto Dealer Bond

In Delaware, the local DMV has established a $25,000 bonding requirement for getting licensed as an auto dealer. 

The bond exists to ensure that auto dealers conduct their business in accordance with Delaware auto dealer regulations and fulfill their financial obligations to customers. It serves to protect auto dealer customers in case they are harmed by auto dealers who break the law. For example,selling a car without a valid title would be considered a violation of the law and would be grounds for filing a claim.

You can find all the rules and details in chapter 30 of the Delaware code.

Sample Payment and Performance Bond Form
Delaware Auto Dealer Bond Form
Delaware Auto Dealer Bond

Bond Amount: $25,000

Required By: State of Delaware, Department of Revenue

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Delaware Auto Dealer Bond FAQs

Why is the Delaware Auto Dealer Bond Required?

The Delaware Auto Dealer Bond is required for two primary reasons:

This bond is a safeguard to ensure that only qualified individuals obtain a motor vehicle dealer's license by deterring individuals with extremely low credit scores or a history of bankruptcy, as they pose an elevated risk of potential claims. This requirement maintains the integrity and professionalism within the auto dealership industry.

If established auto dealers engage in fraudulent activities, this bond serves as a crucial financial protection for car buyers. It helps mitigate consumers' potential financial losses by providing a means to file claims and seek compensation, ultimately upholding transparency and ethical business practices within the auto dealership sector. 

The Delaware DMV enforces regulations for the state's auto dealers.

If you have inquiries regarding the surety bond requirement or your application for a Motor Vehicle Dealer license, you may contact the DMV’s and ask for Dealer Services. You can contact them via phone at 1 (302) 857-4665 or via email.

What does a Delaware Auto Dealer Bond do?

In scenarios where an auto dealer, breaches Delaware regulations, an affected party can initiate a claim through the legal system to seek compensation for their losses and damages. Then, the surety company will honor these claims, covering expenses up to the full bond amount. It's important to note that the responsibility for reimbursing the bonding company lies with the auto dealership. This mechanism ensures financial protection for those who may suffer losses due to a dealer's actions and upholds transparency in the automotive industry.

Do I need to provide my SSN for a Delaware Auto Dealer Bond?

Yes. A social security number is required for the Delaware Auto Dealer Bond to check the credit score of the auto dealer owner. The credit score will be used to determine the premium cost and it will not affect your credit score. 

How Should I Make the Changes to the Bond?

When making adjustments to your bond, simply give us a call/email and we’ll file a bond rider form with the surety company to make the change. This convenient form allows us to update various elements of your bond, such as the effective date, principal's name, and principal's address.

Getting started with the process of modifying your bond is straightforward. All you need to do is get in touch with us. You can reach out to us via phone at (888) 236-8589, and our team will go through the necessary steps. Alternatively, you can contact us via email at, and we'll provide you with prompt assistance.

How long does it typically take to get approved for a Delaware Auto Dealer Bond?

It takes no more than 24 hours to get approved for a Delaware Auto Dealer bond. 

Bond applications are quick and convenient, usually taking around 3 minutes to complete. If further information is required, our team will reach out to you.

Smaller bond amounts, particularly those under $10,000, typically receive nearly instant approval. However, for higher bond amounts, such as $25,000, the approval process involves a more thorough review, including a manual assessment of credit and related factors by our surety auto dealer underwriter. 

How do you file an Auto Dealer Bond in Delaware?

Once approved for a bond, we will file the bond for you. Auto dealers should mail the completed bond form and power of attorney to:

Division of Revenue
P.O. Box 9811
820 N. French Street
Wilmington DE 19801

For the state of Delaware, it is the responsibility of the auto dealer to send out the proof of bond approval.

How do I get the best price for a Delaware Auto Dealer Bond?

We work with over 10 surety carriers to provide you with the most competitive rates. Our process is designed to secure the best possible pricing for your auto dealer bond.

When you are filling out your application, it's crucial to provide precise and detailed information. This ensures that we can tailor your bond to fit your specific needs and obtain the most favorable rate.

If you're a current bondholder, you can take proactive steps to secure an even better renewal rate. Maintaining good financial health for your business and sustaining a high credit score are key factors. A higher credit score increases the likelihood of securing a lower renewal rate. Moreover, if both your business and credit have improved by the time of renewal, you can anticipate even more favorable pricing for your bond's renewal.

What are some best practices to prevent Delaware auto dealer bond claims? 

Dealers must adhere to state-specific regulations to prevent potential claims on the Motor Vehicle Dealer Bond. Below are some key areas known to generate such claims: 

  • Not maintaining a permanent business location and address that complies with state regulations
  • Falsifying information during the application process.
  • Tampering with the odometer of any motor vehicle 
  • Engaging in illicit sales practices that can result in claims 
  • Not meeting tax obligations punctually and in full. 
  • Failing to adhere to timely and complete payment to vehicle sellers
  • Involvement in fraudulent activities 
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