Nebraska Auto Dealer License Guide

Learn how to become licensed as a Nebraska 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 Nebraska. 

What Are the Different Types of Nebraska Auto Dealer Licenses?

Nebraska’s Motor Vehicle Industry Licensing Board (MVILB) issues the following types of dealer licenses:

• New and used motor vehicle, trailer, and motorcycle dealer license
• Motor vehicle auction dealer license
• Manufacturer/distributor/branch dealer license
• Motor vehicle wreck or salvage dealer license

The first of these is the most common and therefore is the focus of this article.

What Are the Steps in the Licensing Process?

The following overview assumes that you have already established your dealership as a legal business entity and registered it with the state for tax collection purposes. To obtain a used dealer license you will need to:

• Register the business through the Nebraska One-Stop Business Registration Portal and receive a Federal Employer Identification Number from the IRS and a Nebraska Tax ID number.
• Establish a permanent business location that meets the requirements of the Nebraska Motor Vehicle Industry Licensing Act and obtain local zoning approval.
• Purchase garage liability insurance that provides the required coverage.
• Purchase Workers’ Compensation insurance if you will have employees.
• Purchase a $50,000 Nebraska auto dealer bond.
• Complete the license application and return it by mail to MVILB, along with all required documentation.
• Schedule an inspection of your dealership location. After you pass the inspection, your application package will be returned to you, together with the inspection report.
• Resubmit the package to MVILB and pay the license fee (currently $400).

All Nebraska dealer licenses expire on December 31 of each year.

Why is a Nebraska Auto Dealer Bond Required?

Nebraska auto dealer bonds are important to maintaining public confidence in the state’s auto dealing industry. They obligate dealers to operate in compliance with all legal requirements and to compensate those who have experienced a financial loss because of their noncompliance.

MVILB (the “obligee” requiring the bond) can file a claim to recover unpaid taxes and fees, and consumers can file one to be compensated for the financial harm caused by such unlawful acts, such as fraudulently altering a vehicle title or concealing prior damage to a vehicle. The dealer (the bond’s “principal”) is legally obligated to pay all claims deemed valid by the bond’s guarantor (the “surety”).

How Are Nebraska Auto Dealer Bond Claims Paid?

Because the surety guarantees that the principal will pay all valid claims, the customary practice is for the surety to pay a claim initially. Later, the principal will reimburse the surety. The surety bond agreement indemnifies the surety against any liability for claims and therefore, can take legal action against the principal if not reimbursed for claims paid on the principal’s behalf.

How Much Does a Nebraska Auto Dealer Bond Cost?

To purchase or renew a Nebraska auto dealer bond, the principal will pay an annual premium that is a small percentage of the $50,000 bond amount. That percentage is the premium rate, which is established through an underwriting process that assesses the risk to the surety—specifically, the risk of not being repaid for claims paid on the principal’s behalf.

The better the principal’s credit history, the lower the risk is for extending credit to the principal. The opposite is also true as the lower the premium rate, which could be less than one percent for those with outstanding personal credit. Someone with a low personal credit core, however, will be assigned a premium rate that could be as high as ten percent.