Before you can get an auto dealer license in Oregon, you have to do some work. You’ll need to take the required pre-license education hours, for example, and submit your completed vehicle dealer application to the Oregon DMV. On top of all of that, you also need to submit proof that you have the required level of bonding and insurance.
The bond you need, in particular, can feel pretty complicated. It’s made extra confusing by the fact that the bond amount you need changed in recent years.
Rather than wading through countless articles from bond companies — often with conflicting information — we’re here to provide you with everything you need to know. Here’s your guide to the bond required for auto dealers in Oregon, including the bond amount and how to prove you have it to the DMV.
First up, let’s figure out why you have this to-do on your list.
When you run an auto dealership, there’s an assumption from your customers that you’ll act both lawfully and ethically. They assume that you got the car you’re selling them through legal means and that you’re telling the truth about the vehicle, for example.
If you don’t act in accordance with Oregon motor vehicle dealer rules and regulations, the bond gives them recourse. They can file a claim against your bond. If your bond company finds their claim valid, they use the bond to pay what is essentially a settlement to that customer. At that point, you’ll be on the hook to pay that money back to your bond company.
Fortunately, most auto dealers don’t end up using their bond. In fact, you can often avoid this situation by responding promptly to customer complaints. Work to find a resolution so your bond company never gets involved.
Now, let’s talk brass tacks. Oregon auto dealers need to get a surety bond in the amount of $50,000. This limit used to be $40,000, so don’t get confused if you see articles saying you only need a 40k bond. Today, the current requirement sits at $50,000.
If you don’t believe us, check the fine print on Form 735-370B, which you can find on page 7 of the auto dealer application packet.
In fact, that’s the same form you’ll use to prove to the DMV that you have the bond you need. Make sure of three things when you fill out that form. Double-check that:
Getting a $50,000 bond doesn’t mean coming up with 50k cash. Instead, you’ll just pay a small percentage of the bond amount as a premium to your bond company.
That percentage depends on your credit score (better credit will mean paying less), but you can expect your bond premium to cost between 1 and 4% of the total bond amount. At max, you shouldn’t need to pay more than $2,000 to get your bond.