Arizona Car Dealer License Guide

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Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Arizona car dealer bond needs. Learn how to get an Arizona car dealer license, and contact us today to request a quote on the bond you need.

What Are the Different Types of Arizona Auto Dealer Licenses?

Arizona’s Department of Transportation issues different types of auto dealer licenses for:

  • New motor vehicle dealers
  • Used motor vehicle dealers
  • Automotive recyclers
  • Brokers
  • Public consignment auction dealers
  • Wholesale motor vehicle auction dealers
  • Wholesaler motor vehicle dealers

Regardless of the specific type of license, the licensing process is pretty much the same.

What Are the Steps in the Licensing Process?

There are several steps you must complete before submitting a license application.

  1. Apply for and undergo a criminal background check if necessary (if you own 20% or more of the business and have not gone through a background check in the preceding five years)
  2. Establish your permanent business location and take photos of it.
  3. Purchase an Arizona auto dealer bond in the required amount ($20,000, $25,000, or $100,000 depending on the type of license).
  4. Gather the above documents and any other required supporting documents prior to filling out the Motor Vehicle Dealer/Sales Finance Company Application and getting it notarized.
  5. Submit the completed application and all supporting documents to the Motor Vehicle Division, Dealer Licensing Unit in Phoenix.
  6. You’ll be invoiced by ADOT for your auto dealer license after you’ve passed the criminal background check.
  7. If you’ll be financing vehicles, you’ll get a separate invoice from AZDFI for your Sales Finance Company license.

Why is an Arizona Auto Dealer Bond Required?

The purpose of an Arizona auto dealer bond is twofold:

  • It is a dealer’s guarantee to operate within the confines of state laws governing motor vehicle sales.
  • It provides a way to compensate parties injured by the dealer’s failure to do business in a lawful and ethical manner.

The bond is a legally binding contract among an obligee (AZDOT), a principal (the dealer), and a surety (the company authorizing and guaranteeing the bond). The terms of the surety bond agreement place the legal obligation to pay valid claims squarely on the shoulders of the principal.

How Are Arizona Auto Bond Claims Paid?

In practice, things usually work a little differently. In selling an Arizona auto dealer bond, the surety is guaranteeing the payment of valid claims. So, unless the principal satisfies a claim immediately, the surety will pay it initially, and then collect repayment from the principal.

How Much Does an Arizona Auto Dealer Bond Cost?

Arizona auto dealer bonds are subject to underwriting, which results in a premium rate that reflects the surety’s assessment of the principal’s creditworthiness and the risk that paying claims on behalf of the principal would entail.

The key factor in making that determination is the principal’s personal credit score. With a high credit score, you can expect to pay a premium rate in the range of one to two percent of the required bond amount. A lower credit score will result in the assignment of a higher premium rate.

Our surety bond professionals will get you the Arizona auto dealer bond you need at a competitive rate.