Missouri Auto Dealer License Guide

Learn how to become licensed as a Missouri auto dealer, and speak with an Single Source Insurance agent today about purchasing the bond you’ll need to operate as an auto dealer in Missouri. 

What Are the Different Types of Missouri Auto Dealer Licenses?

The Missouri Department of Revenue, Motor Vehicle Bureau (MVB) issues all Missouri auto dealer licenses. The most common type is the license issued to dealers who sell, auction, or manufacture new or used vehicles. MVB also issues lease/rental, title, salvage, and transportation network company dealer licenses. Our focus here is on the dealer/auction/manufacturer license.

What Are the Steps in the Licensing Process?

Once you’ve established your dealership as a legal business entity and registered it with the office of the Missouri Secretary of State, you can begin the process of applying for your dealer’s license. Key steps in that process include:

• Purchase or lease a permanent business location that meets MVB requirements and erect the required signage.
• Have your business location inspected by an authorized law enforcement officer.
• Enter into a franchise agreement if you will be selling new vehicles.
• Purchase garage liability insurance to cover vehicles in inventory.
• Undergo a background check and obtain the report.
• Purchase a $50,000 Missouri auto dealer bond.
• Complete a state-approved dealer education program.
• Complete the online license application. You can either submit it online, uploading the required supporting documents, or by mailing the entire package to MVB. The application fee is prorated according to the month in which you apply for a license.

Missouri auto dealer licenses must be renewed annually before they expire on December 31.

Why is a Missouri Auto Dealer Bond Required?

Missouri auto dealer bonds are required as financial protection for the state and the public against losses caused by the unlawful or unethical actions of a licensed dealer. The terms of the surety bond agreement obligate the dealer (referred to as the bond’s “principal”) to do business in compliance with all applicable laws. But that doesn’t mean there won’t be any violations. The bond also obligates the principal to compensate those who experience a financial loss due to the principal’s unlawful or unethical business practices, such as failing to pay taxes and fees owed to the state or defrauding a consumer by altering a title or misrepresenting the condition of a vehicle.

There are two other parties to a Missouri auto dealer bond, known as the “obligee” and the “surety.” The “obligee” requiring the bond is the Missouri Department of Revenue, and the surety is the party guaranteeing the payment of claims.

How Are Missouri Auto Dealer Bond Claims Paid?

As the bond’s guarantor, the surety typically pays a valid claim initially, on behalf of the principal, and is reimbursed by the principal at a later date. The principal’s obligation to pay valid claims simply becomes an obligation to repay the surety. Failing to do so can result in the surety taking legal action against the principal.

While the terms of a Georgia auto dealer bond obligate the principal to pay all claims the surety deems legitimate. In effect, the surety’s payment of the claim on the principal’s behalf is an extension of credit to the principal—credit that must be repaid. The surety is indemnified against any responsibility for damages caused by the principal and can take legal action against the principal if not repaid.

How Much Does a Missouri Auto Dealer Bond Cost?

The annual premium cost of a Missouri auto dealer bond is determined by multiplying the $50,000 bond mount by the premium rate set by the surety, largely on the basis of the principal’s credit. The assumption is that someone who has been responsible about paying bills and managing credit in the past will be responsible about repaying the surety for claims paid on the principal’s behalf.

The higher the principal’s personal credit score, the lower the risk to the surety, and the lower the premium rate. The reverse is also true. A low credit score signals greater risk, which warrants a higher premium rate. Depending on your credit score, you could pay as little as $250 or as much as $4,500 for a Missouri auto dealer bond.