Vermont Auto Dealer Bond

Vermont uses a volume-based schedule set by the Commissioner of Motor Vehicles under 23 V.S.A. 453(g). Your bond amount depends on units sold in the previous year: fewer than 25 vehicles requires $20,000; 25-100 vehicles requires $25,000; 101-250 vehicles requires $30,000; and 251+ vehicles requires $35,000. If you were not registered as a dealer in the prior year, the default amount is $35,000. This sliding scale rewards established dealers with lower volumes.

Yes. Vermont is one of the few states that accepts three types of financial security: a surety bond, an irrevocable letter of credit, or a certificate of deposit. If using a CD, it must be issued in the dealer's name and assigned to the Commissioner of Motor Vehicles. All three options must be from an entity authorized to transact business in Vermont. Most dealers choose surety bonds because they don't tie up capital like a CD or letter of credit would.

Vermont dealer bond premiums depend on your required bond amount and credit score. For a $20,000 bond (fewer than 25 vehicles): expect $200-$2,000/year. For a $35,000 bond (251+ vehicles or new dealer): expect $350-$3,500/year. Excellent credit (750+) typically qualifies for 1-2% of the bond amount. The volume-based system means established low-volume dealers pay less than in most states.

Unlike most states where bonds expire after one year, Vermont dealer bonds remain in effect for the pending registration year and one additional year thereafter, per 23 V.S.A. 453(g). This extended coverage period provides consumers with an extra year of protection after a dealer's registration expires or is not renewed.

The Vermont dealer bond serves as indemnification for monetary losses suffered by the State or by a purchaser of a motor vehicle due to a dealer's failure to remit fees collected on behalf of the Commissioner. The State or any motor vehicle owner who suffers a loss has the right to claim against the surety bond, letter of credit, or certificate of deposit. This is narrower than some states -- it specifically covers fee remittance failures.

Vermont requires new dealers (those not registered in the immediately prior year) to carry the maximum $35,000 bond amount. This is because there is no prior-year sales volume to determine a lower tier. After your first full year of operation, you can request a bond amount reduction based on your actual sales volume. If you sold fewer than 25 vehicles, you could drop to $20,000 -- potentially cutting your premium nearly in half.

Yes. Vermont's relatively modest bond amounts ($20,000-$35,000) make approval more accessible even with challenged credit. If a surety bond proves difficult, remember that Vermont also accepts letters of credit and certificates of deposit as alternatives, though these require tying up the full amount in cash or credit.

After completing your first year as a registered Vermont dealer, report your total units sold to the Commissioner of Motor Vehicles. If you sold fewer than 251 vehicles, you qualify for a reduced bond amount at your next renewal: fewer than 25 units drops you to $20,000; 25-100 units to $25,000; 101-250 units to $30,000. Contact us to adjust your bond amount and potentially lower your annual premium.