Typical Premium
$250–$1,250/yr
Required By
TN Motor Vehicle Commission
What Is the Tennessee Motor Vehicle Dealer Bond?
Under Tennessee Code Annotated §55-17-114, every applicant for a motor vehicle dealer license must file a $25,000 bond with the Tennessee Motor Vehicle Commission. The bond runs with the annual dealer license and protects:
- Retail buyers for failure to deliver title within 30 days
- Trade-in lienholders for unsatisfied liens
- The State of Tennessee for unpaid sales tax
- Persons damaged by willful violation of TCA §55-17 (motor vehicle dealer law)
Tennessee also requires dealers to maintain garage liability insurance in addition to the bond.
Who Needs This Bond in Tennessee?
- New motor vehicle dealers — franchised dealers
- Used motor vehicle dealers
- Wholesale dealers — dealer-to-dealer only
- Auctions selling vehicles to the public or wholesalers
- Motor vehicle brokers — intermediaries arranging sales for compensation
How Much Will the Bond Cost?
Tennessee dealer bonds are credit-priced. Most established dealers pay $250–$500 annually:
| Credit Profile | Annual Premium | Approx. Rate |
|---|
| Excellent Credit | $250 – $375 | 1% – 1.5% |
| Good Credit | $375 – $625 | 1.5% – 2.5% |
| Fair Credit | $625 – $875 | 2.5% – 3.5% |
| Credit Challenges | $875 – $1,000 | 3.5% – 4% |
| Past Credit Issues | $1,000 – $1,250+ | 4% – 5%+ |
How to Get Bonded — Step by Step
- Complete the TN dealer pre-licensing course (8 hours, MVC-approved provider).
- Pass the dealer-operator exam.
- Apply for your bond — same-day issuance for clean-credit applicants.
- Submit MVC license application with bond, garage liability proof, lease, and signage proof.
- MVC inspection of the dealership premises.
Renewal & Continuous Bond Coverage
Tennessee dealer bonds run annually. The MVC mails renewal notices 60 days before expiration. Lapsed bonds result in immediate license suspension; the dealer cannot legally sell vehicles or transfer titles until reinstated.
Frequently Asked Questions
Does Tennessee require a separate motorcycle dealer bond?
Motorcycle dealers operating under the same dealer license post the same $25,000 bond. Standalone motorcycle-only dealers may have specific licensing nuances — verify with the MVC.
What's the most common claim against TN dealer bonds?
Title delivery failures — particularly when a dealer goes out of business with title work outstanding. Sales tax non-remittance is the second-most-common claim category.
Do I need garage liability insurance separately?
Yes. Tennessee requires both the $25,000 bond and minimum garage liability coverage ($500K combined single limit typical). They cover different risks.
Are auctions licensed differently?
Auctions hold a specific MVC license and post the same $25,000 bond. They face additional regulations around buyer/seller fee disclosure.
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Related: All Tennessee surety bonds ·
What is a surety bond? ·
How surety bond costs are calculated
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.