Alabama ups motor vehicle dealer license bond amount

ALABAMA — Lawmakers passed updates to several state motor vehicle dealer licensing regulations, including a surety bond amount increase and violation penalty adjustments.

The changes outlined in House Bill 393 will go into effect in October 2020 and will affect new and used motor vehicle dealers, motor vehicle rebuilders and motor vehicle wholesalers or wholesale motor vehicle auctions. The bill, now known as Amendment 621, can be found in Section 111.05 of the Constitution of Alabama.

Before any dealer license may be issued, an applicant must obtain a surety bond in the sum of no less than $50,000, according the amendment. This is an increase from the previous requirement of a $25,000 surety bond.

Note that the licensee, also known as the “principle” on the bond, will only have to pay a premium, which usually runs from anywhere 1-4% of the total bond amount.

The new regulations also change the limitations on dealer license plates. A Licensed new vehicle dealer will be able to purchase up to 35 — up from 25 — dealer and motorcycle dealer license plates. A licensed used vehicle dealer will only be about to purchase five — down from 10 — plates. Some dealers may qualify for additional plates, as detailed in the amendment.

The fee to issue each dealer license plate will increase from $1.75 to $2.

Anyone who violates this article will be guilty of a Class A misdemeanor. In addition, The Department of Revenue may issue a penalty of up to $5,000, which may be assessed against the bond. This part of the law has not changed with the new amendment; however, the penalty for failing to acquire the license will now be $500 for a first-time violation and $1,000 for subsequent violations.

Applications for an Alabama dealer regulatory license must be submitted to the department electronically here, according the department’s website.

Alpha Surety & Insurance Brokerage will be happy to answer any questions regarding an Alabama Motor Vehicle Dealer Surety Bond or any surety bond questions in general. You can call 800-901-3099 or send an email through the contact us page. We are here to answer your questions and help you fully understand surety bonds regardless of whether you choose to bond with us.

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