Alabama Auto Dealer License and $50,000 Dealer Bond
Alabama requires every motor vehicle dealer to file a continuous $50,000 bond to hold a license. That one bond also stands behind your duties as a designated title agent and can be assessed for tax owed under Title 40, Chapter 23.
- Who requires it: Alabama Department of Revenue (ALDOR); Ala. Code § 40-12-398 (as cited by ALDOR).
- Timing: We submit complete applications to the carrier promptly; most quotes within one business day.
Official Alabama Requirements
"The dealer bond also satisfies the designated agent bonding requirement."ALDOR, Dealer License and Dealer License Plate Requirements • View Official Requirements →
One $50,000 bond, two jobs
Every Alabama dealer licensee files a continuous surety bond of $50,000. The form uses one $50,000 sum for every license type it covers.
The bond is held in favor of the Commissioner of Revenue and is payable to the Alabama Department of Revenue (ALDOR). It answers to any person who wins a judgment for a loss caused by a violation of the dealer's license duties. The bond is conditioned on your keeping the terms of any contract made when you sell or exchange a motor vehicle, and on your not breaking the laws that govern the licensed business.
Alabama folds two obligations into this single bond. All dealers must become designated agents of the department, and the dealer bond also satisfies that designated-agent bonding requirement. It is further conditioned on your faithful performance as a designated agent. On top of that, statutory penalties and any tax liability you incur under Title 40, Chapter 23 may be assessed against the bond.
The bond was $25,000 in earlier years. HB 393 of 2019 raised it, with the change applying to periods beginning on or after October 1, 2020. It is a continuing bond and must be renewed and extended for you to keep your licenses in force.
What you pay is a share of the bond amount, set by the surety from your credit and finances.
How a bond claim works
A claim is not paid on request. A claimant must first secure a final judgment from a court of competent jurisdiction. They must then exhaust all available remedies to collect that judgment before making a bond claim with the department. The claim runs through ALDOR, and the surety company has 30 days to remit payment or request an extension to investigate. Once the department receives payment from the surety, it remits payment to the claimant.
Keep the bond active. If ALDOR receives a cancellation notice from the surety and no new bond is filed before the cancellation date, the license and designated-agent status are revoked immediately.
Getting your dealer license
Applications for an Alabama dealer regulatory license go to ALDOR electronically through the Alabama Partner Registration Portal. A license is required for new and used motor vehicle dealers, including motorcycle and trailer dealers, wholesale dealers, and rebuilders.
Your application includes your state sales tax number, the number of motor vehicles you sold during the previous calendar year, a copy of the driver license or non-driver ID for every owner, partner, member, officer, and director, and evidence of blanket motor vehicle liability insurance. That blanket liability coverage must meet minimum limits of $25,000 bodily injury per person per accident, $50,000 combined bodily injury per accident, and $25,000 property damage per accident, or a combined single limit of $75,000 per accident. Failure to keep this policy carries a $5,000 civil penalty.
File the bond on form MVT 4-3, the Motor Vehicle Surety Bond. It must be accompanied by a power of attorney showing the agent is authorized to execute the bond, and it must be executed by a surety company authorized to do business in Alabama. Postdated bonds are not accepted.
A master dealer license lets one dealer act in several roles. For a new motor vehicle dealer it covers new, used, wholesale, and rebuilder activity; for a used dealer it covers used, wholesale, and rebuilder activity. HB 393 of 2019 created the master regulatory dealer license. Each additional place of business carries a $5 fee.
Processing takes about 3 to 5 business days after the department receives your documents. Licenses are not mailed; when your application is cleared, you receive an email instructing you to log in and print your license.
Fees
| Item | Fee |
|---|---|
| Master Dealer License | $125 |
| Each additional place of business | $5 |
| Off-site sales license | $25 |
| Master off-site sales license | $25 |
The rule calls the $125 the application fee under § 40-12-392, and the $5 the supplemental-location fee under § 40-12-395.
Off-site sales are limited to 3 events per dealer license year, each lasting no more than 10 consecutive calendar days, and the off-site license must be purchased at least 10 calendar days before the sale.
A state quirk worth planning for is dealer plates. New motor vehicle dealers may obtain a combined total of 35 dealer and motorcycle dealer plates, and used dealers may obtain 10. A new or used dealer may buy an additional combined total of 25 if they complete 300 or more title transfers in the previous license year. Dealer plates cost $25 and dealer motorcycle plates $17.
Renewal and expiry
Licenses must be renewed on October 1 each year. A license runs for one year from the first day of October. You get a 30-day grace period without penalty; after 30 days, a penalty of 15% of the license amount applies. If you have outstanding liabilities from penalty assessments for license plates, your license will not be renewed. A surety that asks ALDOR in writing to be released stays liable for anything that accrues until 60 days after that request.
Your place of business
To establish a permanent location, you must satisfy at least 3 of 9 factors listed in the rule, such as an Alabama driver license, Alabama incorporation, an Alabama income tax return, utility bills, or a lease or mortgage. A permanent location does not include a shared or common space with other tenants, space rented by the hour or day, cubicles, temporary, virtual, or rotating office space, or more than one dealer under the same roof.
The location must be properly zoned for business, have posted operating days and hours, and have an area set aside as display space for your inventory. The letters that identify the type of seller cannot be less than 6 inches high and must be large enough to read from the street fronting the display area, or from 50 yards, whichever is greater. A photograph of the dealership and principal sign is required only for the initial application, not for renewals, unless the sign or location changes.
Steps
- Confirm you need a license. New, used, motorcycle, and trailer dealers, wholesalers, and rebuilders must be licensed.
- Set up a permanent location. Meet at least 3 of the 9 factors, and make sure the site is zoned, has posted hours, and has display space and a compliant sign.
- Get the $50,000 bond. Obtain a continuous $50,000 bond from a surety authorized in Alabama, on form MVT 4-3 with a power of attorney.
- Line up insurance. Carry blanket motor vehicle liability insurance at the required limits.
- Apply electronically. Submit your application through the Alabama Partner Registration Portal and pay the $125 fee, then send your supporting documents the way ALDOR's instructions tell you.
- Print your license. After processing, ALDOR emails you to log in and print the license; it is not mailed.
- Renew by October 1. Renew each year, using the 30-day grace window to avoid the 15% penalty.
Frequently asked questions
How do I get a dealer license in Alabama?
Apply to ALDOR electronically through the Alabama Partner Registration Portal, and submit your documents, the $50,000 bond, and the fee.
How much is the auto dealer bond?
It is a continuous $50,000 bond for every licensee.
Who does the bond protect?
It is held for the Commissioner of Revenue and answers to any person who wins a judgment for a loss caused by a violation of the dealer's license duties. It also covers your designated-agent title duties and can be assessed for tax liability under Title 40, Chapter 23.
What does a car dealer license cost in Alabama?
The Master Dealer License fee is $125, with $5 for each additional place of business.
When does my license renew?
Licenses renew on October 1 each year, with a 30-day grace period before a 15% penalty applies.
What insurance do I need?
You need blanket motor vehicle liability insurance meeting ALDOR's limits, or a $75,000 combined single limit per accident.
Does one bond cover my title duties?
Yes. All dealers must be designated agents, and the dealer bond also satisfies the designated-agent bonding requirement.
How long does it take?
Processing is about 3 to 5 business days after ALDOR receives your documents, and you print the license yourself once it clears.
How do I get an Alabama auto dealer bond?
Request a quote with the form on this page. A licensed agent submits your application to a Treasury-listed surety carrier; once the carrier issues your bond, file it as the requiring agency directs.
What happens after I apply?
We submit complete applications to the carrier promptly; most quotes come back within one business day. The carrier decides approval and the final premium, and you pay only when your bond is issued.
Sources
- ALDOR — Dealer License and Dealer License Plate Requirements
- ALDOR FAQ — Who is required to be licensed
- ALDOR FAQ — How do I obtain an Alabama motor vehicle dealer license
- ALDOR FAQ — Dealer license fees
- ALDOR — MVT 4-3 Motor Vehicle Surety Bond
- ALDOR — Memo 2014-17
- Ala. Admin. Code ch. 810-5-12
- HB 393, 2019 Regular Session (enrolled)
Licensing in a nearby state? See our Georgia, Tennessee, Mississippi, and Florida dealer bond pages.
Alabama dealers: vehicles without a title
If a trade-in or auction unit arrives with a missing or defective title, a bonded title may clear it. See the Alabama bonded title page, or see how bonded titles work in other states.
Four situations dealers run into have their own guides: salvage and rebuilt vehicle titles, a trade-in from another state with no title, trailer title rules and VIN corrections on a trade-in.
Stocking more than cars? See motorcycle titles for dealers, a boat with no title and titling an older unit without paperwork.
Handling titles regularly? See how we work with dealers and title services.
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