Hawaii Auto Dealer Bond: The Line-of-Credit Rule, Amounts & Renewal

Bond amounts by dealer class

If a line of credit cannot reasonably be obtained and the Board accepts a bond instead, the bond amount is set by your dealer class and your monthly sales volume on an annual basis, ranging from $10,000 to $200,000. The table below shows the default line of credit for each class alongside the bond the Board may accept in its place.

Applying for your dealer license: documents and fees

If the Board accepts a bond, you attach the original bond form, notarized by both you and the surety, to your application, and you must verify the surety is authorized to do business in Hawaii. You also submit a current financial statement, a lease with a minimum term of one year from the date you apply, and a self-inspection report with a written description and a sketch of the premises. New-vehicle dealers submit a copy of each executed dealer sales and service agreement from the manufacturer or distributor. If you later move from a used to a new dealer license, you file a bond rider increasing the bond to the appropriate amount, or an updated line-of-credit letter. What you pay is a share of the bond amount, set by the surety from your credit and finances.

License fees are separate from anything you pay the surety, and they vary by dealer class, county, and where you fall in the two-year license cycle. A new-vehicle dealer license fee ranges from $367 to $1,172, a used-vehicle, motorcycle, or motor scooter license from $221 to $588, and an auction license is $514 or $978. At the higher point in the cycle, when a half-renewal is included, a Honolulu used-vehicle dealer's $588 breaks down as a $50 application fee, a $195 license fee, a $148 CRF fee, and a $195 half-renewal. Application fees are non-refundable, so confirm the exact fee for your class and county with the Board before you file.

Your place of business and branch locations

Your main location needs a lease with a minimum term of one year from the date you submit the application, plus a self-inspection report describing and sketching the proposed premises. Each branch office within each county requires its own separate Motor Vehicle Dealer Branch Location application. A line of credit or bond does not apply to branch (MVB) applicants, so a branch location does not file its own bond.

Steps

1. Check your security option. Hawaii expects an inventory or flooring line of credit by default; a surety bond is what the Board may accept only when a line of credit cannot reasonably be obtained.
2. Find your amount. Match your dealer class and monthly volume to the table to see the bond the Board may accept, from $10,000 to $200,000, if a line of credit cannot reasonably be obtained.
3. Get your security. Obtain your inventory or flooring line-of-credit confirmation letter from a federally insured financial institution or a financing source with a net worth of at least $50 million; if one cannot reasonably be obtained and the Board accepts a bond, obtain it from a surety authorized in Hawaii or deposit cash with the Board.
4. Notarize the bond form. If the Board accepts a bond, both you and the surety complete and notarize the Board's bond form (MOVE-13), which names the County Treasurer and the Board as obligees.
5. Assemble your documents. Include a current financial statement, a lease of at least one year, a self-inspection report with a sketch, and, for new-vehicle dealers, each dealer sales and service agreement.
6. File and pay. Attach your line-of-credit letter, or the original bond if you use one, to your application, and pay the fee for your class and county; the application fee is non-refundable.
7. Renew on time. Renew on or before June 30 of each even-numbered year; there is no late renewal.

Sources

• Hawaii Administrative Rules, Title 16 Chapter 86 (Motor Vehicle Dealers and Salesmen)
• Application for Motor Vehicle Dealer or Auction, Motor Vehicle Industry Licensing Board (DCCA)
• Bond Form: Motor Vehicle Dealer License (MOVE-13)
• Motor Vehicle Industry Licensing Board FAQs
• Motor Vehicle Industry Licensing Board (DCCA)
• DCCA Hawaii Revised Statutes index
• DCCA Hawaii Administrative Rules index

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