Delaware Auto 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 Delaware auto dealer bond needs. Learn how to get a Delaware car dealer license, and contact us today to request a quote on the bond you need.

What Are the Different Types of Delaware Vehicle Dealer Licenses?

Delaware’s Division of Motor Vehicles issues dealer licenses in 12 categories: New Vehicle Dealer, Used Vehicle Dealer, Trailer Dealer, Mobile Home Dealer, Motorcycle Dealer, Recreational Vehicle Dealer, Wholesaler, New Truck Dealer, New Equipment, Transporter, Repossession and Auction, Recycler. This article focuses exclusively on getting licensed as a used vehicle dealer.

What Are the Steps in the Licensing Process?

You must have been a Delaware resident, with a Delaware driver’s license, for at least 90 days before applying for licensing as a used vehicle dealer. You’ll need to complete a dealer license application and submit it along with such items as:

  • A criminal history background check and signature authorization
  • Local zoning approval
  • Proof of liability insurance
  • Copy of your business license from the Division of revenue
  • A Delaware auto dealer surety bond in the amount of $25,000

Why is a Delaware Auto Dealer Bond Required?

The state of Delaware requires every applicant for licensure as an auto dealer to purchase a surety bond for $25,000 to:

  • Ensure that the dealer complies with all state laws governing the sale of motor vehicles and pays all taxes and fees due to the state
  • Provide a source of funds for compensating consumers for financial harm resulting from the dealer’s unlawful or unethical actions

Failure to maintain a valid auto dealer bond in force at all times can result in license suspension or forfeiture.

How Are Delaware Auto Dealer Bond Claims Paid?

The surety bond agreement for a Delaware auto dealer bond brings three parties together in a legally binding contractual relationship:

  • The “obligee” requiring the bond is the Delaware DMV,
  • The “principal” purchasing the bond is the auto dealer, and
  • The “surety” is the company guaranteeing the bond.

The agreement gives the principal the legal obligation to pay all valid claims against the bond. The surety investigates every claim received and determines whether it is valid and should be paid. Although the legal responsibility for paying claims rests with the principal, what generally happens is that the surety will pay a claim initially, which creates a debt that the principal must repay to the surety.

How Much Does a Delaware Auto Dealer Bond Cost?

The annual premium for a Delaware auto dealer bond depends on the required bond amount, $25,000, and the premium rate set by the surety based on an underwriting assessment of the principal’s creditworthiness. The surety’s main concern, of course, is the risk inherent in paying claims on behalf of the principal and waiting to be repaid.

A high personal credit score is a good indication of low risk to the surety and results in a low premium rate. Conversely, a low credit score suggests higher risk to the surety and therefore a higher premium rate.

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