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Does Tennessee Require Used Motor Vehicle Dealers to Have a Bond?

A used motor vehicle on a sales lot

The State of Tennessee Department of Commerce and Insurance, Regulatory Boards Division, Tennessee Motor Vehicle Commission is responsible for compliance of state motor vehicle dealer and manufacturer licensing laws, rules and regulations.

The Motor Vehicle Commission is tasked with licensing of all franchised and Used Motor Vehicle Dealers and salespersons, franchised motorcycle dealers, franchised recreational vehicle dealers, motor vehicle auctions, motor vehicle manufacturers, vehicle dismantlers and recyclers, and mobility dealers.

The Tennessee Code Annotated Title 55 Chapter 17 provides details on vehicle sales licenses. The following is required for licensure:

1. Complete the motor vehicle dealer license application and pay the applicable fee.
2. Complete the “Eligibility Verification for Entitlements Act Attestation.”
3. Obtain a $50,000 surety bond and submit the original to the state. The name on the bond must be exactly the same as the entity being license and requires the physical location of the applicants business address.
4. The bond and license period is for two years.
5. Provide a Certificate of Liability of Insurance with a minimum of $300,000 liability insurance per occurrence, include garage liability coverage.
6. Provide a copy of a current business tax license obtained in the county in which the business will be located.
7. Obtain business office of at least 288 square feet, a display lot with minimum space for 15 vehicles and signage that meets the Commission requirements.
8. Provide copy of written approval form a county or municipality entity as to zoning compliance of the motor vehicle auction business.
9. Provide a Service Agreement with a repair garage location if the applicant's business will not have a mechanic on site.
10. Provide financial statements with a compilation letter from a CPA that shows a minimum net worth of at least $10,000.
11. Provide financial disclosure for any owner, partner, director, etc. having a 5% or more stock or share interest in the company.
12. Provide a copy of a current Tennessee Department of Revenue Sales & Use Tax Certificate.
13. Provide a copy of the charter for corporation, LLC, or LLP (if any). If business is an out-of-state corporation or LLC, provide a copy of the Certificate of Authority to do business in Tennessee.
14. All salesperson applications must be submitted with the original application.
15. Provide a final copy of judgement and or disposition signed by the court of issuance, for any owner, officer, partner, etc. convicted of a felony. Further requirements can be found on the dealer application.

How Much Will This Bond Cost?

The premium that you pay for a Tennessee Used Motor Vehicle Dealer Bond is dependent on credit.

Did You Know?

Each used motor vehicle dealership branch, satellite location or other location requires a separate application and surety bond.

Related Links:

Tennessee Motor Vehicle Dealer Application
Tennessee Business Name Change Form
Tennessee Dealer Floor Plan Agreement
Tennessee Minimum Requirements for Motor Vehicle Dealer License
Tennessee Motor Vehicle Commission Fee Schedule
Tennessee Helpful Information for Motor Vehicle Dealers
Tennessee Dealer Re-Location Licensing Procedure Changes
Federal Trade Commission Dealer's Guide to the Used Car Rule


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