Michigan Auto Dealer Bond ($10,000) — Secretary of State Requirements

Bond Amount

$10,000

Typical Premium

$100–$500/yr

Term

1 Year

Required By

MI Secretary of State

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What Is the Michigan Vehicle Dealer Bond?

Michigan Compiled Laws §257.248 requires a $10,000 surety bond from every applicant for a dealer license. Michigan's bond amount is among the lowest in the country — raised from $5,000 to $10,000 in the early 2000s but unchanged since.

The bond protects retail buyers, the State of Michigan, and any party damaged by:

Failure to deliver title within 15 days of sale
Misrepresentation of vehicle condition or odometer
Failure to satisfy a prior lien on a trade-in
Sales tax not remitted to the Michigan Treasury

Who Needs This Bond in Michigan?

License Class	Description	Bond
Class A	New Vehicle Dealer (franchised)	$10,000
Class B	Used Vehicle Dealer	$10,000
Class C	Used Parts Dealer	$10,000
Class D	Distressed Vehicle / Salvage Dealer	$10,000
Class E	Broker	$10,000
Class W	Wholesale Dealer	$10,000

How Much Will the Bond Cost?

Michigan's modest $10,000 bond means most dealers pay under $200 annually:

Credit Profile	Annual Premium	Approx. Rate
Excellent Credit	$100 – $150	1% – 1.5%
Good Credit	$150 – $250	1.5% – 2.5%
Fair Credit	$250 – $350	2.5% – 3.5%
Credit Challenges	$350 – $500	3.5% – 5%+

How to Get Bonded — Step by Step

Secure a permanent place of business with required signage and dealer-class-specific zoning.
Apply for the bond — same-day issuance common.
Submit dealer license application via Michigan eLicense system with bond and fees.
Pre-license inspection by a Secretary of State investigator.
License issuance — typically 4–6 weeks after submission.

Renewal & Continuous Bond Coverage

Michigan dealer bonds run on 1-year terms aligned with the dealer license. The Secretary of State sends renewal notices 60 days before expiration. Lapsed bonds result in license suspension within 30 days.

Frequently Asked Questions

Does the broker license (Class E) get the same bond?

Yes. All dealer classes including brokers (Class E) post the same $10,000 bond. Michigan does not have a tiered structure based on class.

Is $10,000 enough to cover claims?

For most consumer claims, yes — the bulk involve title delays under $5,000 in customer harm. For larger claims (curbstoning fraud), the bond may be exhausted, leaving the dealer personally liable for the remainder.

Do I need garage liability insurance in addition?

The Secretary of State does not require garage liability for the dealer license itself, but most dealers carry it. The bond and insurance cover different risks.

Can I lose my license without a claim?

Yes. Failing to file an annual report, lapsed bond, or unpaid sales tax can all trigger suspension independent of consumer claims.

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Underwriting Disclosure. All surety bond applications are subject to underwriting review and approval by the issuing surety company. Quoted premiums are estimates only; final pricing is determined by individual underwriting factors, which may include personal and business credit history, financial statements, industry experience, and claims history. Many bonds qualify for instant online approval, while others may require additional documentation, financial review, or indemnitor signatures prior to issuance. SuretyBondly makes no representation, warranty, or guarantee of approval, eligibility, premium amount, bond form, or issuance timing. Bond amounts, forms, and requirements are governed by the applicable obligee and statutory authority and may change without notice. Information provided on this page is for general informational purposes only and does not constitute legal, financial, or tax advice.