Texas Motor Vehicle Dealers License Surety Bond

According to the Texas Department of Motor Vehicles (DMV), any person who is engaged in the business of buying, selling or exchanging motor vehicles in Texas must apply for and receive a general distinguishing number (GDN) license. Most GDN license applications must be submitted with a TX Motor Vehicle Dealer License Surety Bond for $50,000.

Following are some frequently asked questions about general distinguishing numbers and TX Motor Vehicle Dealers License Bonds (sometimes also called a Used Car Dealer Bond, a DMV Dealer Bond, an Independent Dealer License Bond, an Independent Dealer Bond or a Dealer Bond):

What is a GDN?

A GDN license is the basic dealer license that allows a person to buy, sell or exchange the specific type of used vehicle for which the general distinguishing number is issued. In addition to a GDN license, if a dealer wishes to buy, sell or exchange new motor vehicles, the dealer must obtain a franchised dealer license.

Do I need more than one GDN?

GDN licenses are broken down into several categories, such as motor vehicle, motorcycle, non-motorized travel trailer, utility trailer/semi-trailer, and others. The dealer must have a GDN for each specific type of vehicle they plan to buy, sell or exchange. For example, if a dealer wants to sell both used motorcycles and used automobiles, that dealer must have both a motorcycle GDN and a motor vehicle GDN.

The dealer must then have the appropriate Texas Motor Vehicle Dealer License Surety Bond, which may include:

Motor Vehicle Dealer License Surety Bond
Motorcycle Dealer License Bond
Wholesale Dealer License Bond
Wholesale and Motor Vehicle Auction License Bond

Who needs a TX Motor Vehicle Dealer License Surety Bond?

All new applications for GDN categories of motor vehicle, motorcycle, wholesale only, wholesale motor vehicle auction and independent mobility motor vehicle must be submitted with a surety bond for $50,000. Franchised dealers, travel trailer dealers, or trailer/semi-trailer dealers are exempt from this requirement.

What is the required amount for a Texas Motor Vehicle Dealer License Bond?

The bond must always equal $50,000. In the event a claim is made and the bond is reduced to below $50,000, a dealer must immediately bring the bond back up to $50,000.

What are the required term dates for a TX Motor Vehicle Dealer License Surety Bond?

The bond must be effective for the same term as the license. All bonds should cover a two-year period and must expire on the last day of a month. For a new license, the license cannot be approved unless the bond is in effect on the date the application is approved.

What does a TX Motor Vehicle Dealer Bond cover?

The GDN license bond guarantees that the licensee, or principal, shall pay all valid bank drafts, including checks drawn by the principal for the purchase of motor vehicles and transfer clear title to each motor vehicle that the principal purports to sell. In other words, the motor vehicle dealer bond guarantees that the dealer will operate an upstanding business and that they are backed by the surety bond in the event that they fail to do so. Learn more about what surety bonds are and how they work.

How do I get my $50,000 TX Motor Vehicle Dealer License Bond?

Our expert staff can get the bond you need at the lowest possible price – apply for your Texas Motor Vehicle Dealer License Bond online now. Our online application process is simple, secure and obligation-free. Plus, we work fast so you can stay focused on your business.

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