An Arizona motor vehicle dealer bond is a surety bond you must file with the Arizona Department of Transportation Motor Vehicle Division (MVD) before it will issue or renew your dealer license. New and used motor vehicle dealers each post a $100,000 bond, while automotive recyclers post a lower amount set at no less than $20,000. It is required under A.R.S. § 28-4362 and protects your customers if you fail to pay title, registration, or related fees, or fail to deliver a clean vehicle title. You do not pay the full bond amount. You pay a yearly premium based mainly on your credit.
| Item | Detail |
|---|---|
| Who requires it | Arizona Department of Transportation, Motor Vehicle Division (MVD) |
| Governing law | A.R.S. § 28-4362 |
| Official form | Vehicle Dealer Bond, MVD form 38-1301 [VERIFY against ADOT form 38-1301] |
| Bond amount | $100,000 for new and used dealers; automotive recyclers at least $20,000; other license types up to $100,000 [VERIFY against Ariz. Admin. Code R17-5-402] |
| Premium basis | A percentage of the bond amount, based mainly on your credit (see cost section) |
| Coverage term | Stays in force until cancelled; the surety must give the MVD director at least 60 days notice to cancel |
| Obligee | The State of Arizona |
How much is the bond, and which amount applies to me?
Arizona sets your dealer bond amount by your license type under A.R.S. § 28-4362. The statute sets a floor of at least $20,000 for an automotive recycler license and a cap of $100,000 for all other licenses, and the specific assigned amounts are set in Arizona Administrative Code R17-5-402. For new and used motor vehicle dealers, the operative amount is $100,000.
| Dealer license type | Required bond amount |
|---|---|
| New motor vehicle dealer | $100,000 [VERIFY against Ariz. Admin. Code R17-5-402] |
| Used motor vehicle dealer | $100,000 [VERIFY against Ariz. Admin. Code R17-5-402] |
| Automotive recycler | [VERIFY against Ariz. Admin. Code R17-5-402; statutory floor is at least $20,000] |
| All other dealer license types | [VERIFY against Ariz. Admin. Code R17-5-402; statutory cap is $100,000] |
[VERIFY: the complete official list of Arizona dealer license types, confirmed against Ariz. Admin. Code R17-5-402 and the MVD Dealer License Types list. The MVD list page is a JavaScript portal that did not return readable content to us, so the full set of license types must come from the official MVD source. A missing license type is a missing page section.]
What does the bond cover?
The Arizona dealer bond protects the people you do business with, not you. Under A.R.S. § 28-4362, it pays a person who suffers a loss because you:
- did not pay customer prepaid title, registration, or other related fees or taxes, or
- failed to deliver a valid vehicle title certificate free and clear of any prior owner’s interest and all liens, except a lien the buyer created or agreed in writing to assume.
The State of Arizona is the obligee on the bond. If the surety pays a valid claim, you are required to repay the surety in full.
[VERIFY against the current full text of A.R.S. § 28-4362: confirm the complete coverage list, including a possible third item covering nonpayment on a trade-in vehicle, which may not be captured above.]
How much does the bond cost?
You do not pay the full bond amount. You pay a yearly premium, which is a percentage of the bond amount based mainly on your personal credit, plus your business finances and experience.
[CLIENT FLAG: premium percentage by credit tier (for example, strong credit X percent, fair credit Y percent), plus one real worked example such as a $100,000 bond at $Z per year.]
We quote your exact rate before you commit to anything.
Is this the same as an Arizona bonded title?
No. A bonded title (certificate of title surety bond) is a separate MVD program that lets an individual title a vehicle when the regular title paperwork is missing. The motor vehicle dealer bond on this page is the license bond a dealership must hold to operate. If you are trying to title a vehicle without proper paperwork rather than license a dealership, see our Arizona Certificate of Title Bonds page.
How do I get bonded and file with the MVD?
- Confirm your dealer license type and the bond amount that applies to it.
- Apply for the bond with a surety. The surety reviews your credit and sets your premium.
- Sign the indemnity agreement and pay the premium.
- The surety issues the official Vehicle Dealer Bond (MVD form 38-1301) with a power of attorney.
- File the executed bond with your MVD dealer license application or renewal.
- Keep the bond active for as long as you hold the license.
Frequently asked questions
How much is an Arizona motor vehicle dealer bond?
New and used motor vehicle dealers each post a $100,000 bond. Automotive recyclers post at least $20,000. Other dealer licenses are set up to $100,000. You pay only a yearly premium of that amount, not the full sum.
Who requires the bond?
The Arizona Department of Transportation Motor Vehicle Division (MVD). The bond names the State of Arizona as the obligee.
What law requires it?
A.R.S. § 28-4362, which directs the MVD to require a dealer bond and sets the amount limits.
Does the amount change by dealer type?
Yes. New and used dealers post $100,000. Automotive recyclers post a lower amount, at least $20,000. Specific assigned amounts are set in Ariz. Admin. Code R17-5-402.
What does the bond protect against?
It pays customers who lose money because the dealer did not pay prepaid title, registration, or related fees or taxes, or did not deliver a valid, clean vehicle title.
Can I post cash instead of a bond?
A.R.S. § 28-4362 requires the bond to be executed by a surety company authorized in Arizona, so a surety bond is what the statute calls for. [VERIFY: confirm whether any cash-deposit alternative exists elsewhere in Title 28 or ADOT rules.]
Can the surety cancel my bond?
Only with at least 60 days written notice to the MVD director. You must replace the bond before it lapses or your license is at risk.
What happens if my bond lapses?
Your dealer license depends on an active bond. If your bond cancels and you do not replace it, the MVD can suspend or cancel your dealer license, which stops you from selling vehicles legally in Arizona.
What form do I file with the MVD?
The Vehicle Dealer Bond, MVD form 38-1301, issued by your surety and filed with your dealer license application or renewal.
