Oregon Auto Dealer License Guide

Learn how to become licensed as an Oregon 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 Oregon. 

What Are the Different Types of Oregon Auto Dealer Licenses?

In Oregon, motor vehicle licenses are issued by the DMV’s Business Licensing Unit. There are several types of dealer licenses, the most common being the standard dealer certificate, which authorizes a dealer to sell both new and used vehicles for three years before it must be renewed. This article focuses on how to obtain a standard dealer certificate.

What Are the Steps in the Licensing Process?

This overview of the licensing process assumes that you already have established a legal business entity and registered it with the Internal Revenue Service to obtain a Federal Employer Identification Number (FEIN). You will then need to:

• Register the business with the state of Oregon.
• Attend an eight-hour pre-licensing course offered by a state-approved provider.
• Establish a permanent business location and obtain approval from the local zoning authority.
• Purchase the required amount of liability insurance.
• Purchase Workers’ Compensation insurance if you will hire employees.
• Furnish an Oregon auto dealer bond in the amount of $50,000.
• Complete the application for a standard dealer certificate and mail it together with supporting documents, and payment of the license fee (currently $1,187 for one dealer plate) to the DMV Business Licensing Unit for processing.

Why is an Oregon Auto Dealer Bond Required?

The $50,000 surety bond requirement helps ensure the integrity of Oregon’s auto sales industry. The bond is a dealer’s guarantee to comply with all applicable state laws and to compensate any party financially harmed by the dealer’s unlawful or unethical business practices.

How Are Oregon Auto Dealer Bond Claims Paid?

There are three parties to an Oregon auto dealer bond, which is a legally binding contract among them. The state of Oregon is the “obligee” requiring the contract; the dealer is the “principal;” and the bond’s guarantor is the “surety.” The principal is legally obligated to pay all valid claims against the bond. But as the guarantor, the surety typically pays a claim initially and is then reimbursed by the principal. Failing to repay that debt can result in the principal taking legal action against the principal.

How Much Does an Oregon Auto Dealer Bond Cost?

To purchase an Oregon auto dealer bond, you’ll pay an annual premium that is a small percentage of the required bond amount, that percentage being the premium rate. The surety sets the premium rate for a given principal based on an underwriting assessment of the risk of not being repaid readily for claims paid on the principal’s behalf. That risk is evaluated based on the principal’s personal credit score.

A high credit score signals a low risk to the surety and is rewarded with a low premium rate, perhaps less than one percent. Conversely, a low credit score is indicative of a high level of risk, which warrants a high premium rate. The average premium rate ranges from one to three percent.