North Carolina Auto Dealer Bonds
Auto dealer bonds protect consumers and the state. The bond amount and license type required depend on your state's DMV.
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At a glance
North Carolina Auto Dealer Bond Key Facts
Governed by N.C. Gen. Stat. § 20-288(e).
The basics
What Is an Auto Dealer Bond in North Carolina?
A North Carolina auto dealer bond — officially the Motor Vehicle Dealer Surety Bond (ISU-409) — is a $50,000 surety bond you must file to get or renew a North Carolina motor vehicle dealer license, plus $25,000 more for each additional established salesroom (G.S. 20-288(e)). You file it with the NC State Highway Patrol Investigative Services Unit, which has handled dealer licensing since July 1, 2025.
Good to know - Required for every North Carolina motor vehicle dealer license — new, used, and wholesale — as well as manufacturers, factory branches, distributors, and distributor branches (G.S. 20-288(e)). The bond is $50,000 for one established salesroom plus $25,000 for each additional salesroom. The one exception: license holders who deal only in trailers with an empty weight of 4,000 lbs or less are exempt and instead file a bond-exempt certification (ISU-406).
The bond is a promise that you will follow North Carolina’s dealer licensing and sales laws (Articles 12 and 15 of Chapter 20). If you or your sales representatives commit fraud, make a fraudulent representation, or otherwise violate those laws and someone loses money, that person can file a claim against your bond up to its full amount.
The bond protects your customers, not you. If the surety company pays a claim, you must repay the surety. North Carolina also lets you post a cash bond or a fixed-value equivalent instead, but most dealers choose the surety bond because it costs a small premium rather than tying up $50,000.
The same bond requirement applies to new, used, and wholesale dealers, as well as manufacturers, factory branches, distributors, and distributor branches. Only dealers who sell nothing but light trailers — an empty weight of 4,000 lbs or less — are exempt.
Qualification
What You Need to Qualify for a North Carolina Auto Dealer Bond
Approval depends on your dealer license type, required coverage amount, and underwriting factors such as credit.
- You are applying for, or renewing, a North Carolina motor vehicle dealer license through the NC State Highway Patrol Investigative Services Unit (ISU) Dealer Section.
- You know how many established salesrooms you will license — North Carolina sets the bond at $50,000 for your first salesroom plus $25,000 for each additional one.
- You have an established salesroom or office in North Carolina: at least 96 square feet in a permanent, enclosed building, with a business sign in block letters at least 3 inches tall and written zoning approval.
- If you are applying as a used motor vehicle dealer, you have completed the required 12-hour licensing course within the last 12 months (some applicants are exempt).
- You have liability insurance that covers your dealer plates, with the certificate ready to include in your application.
- Your bond is written by a corporate surety, approved as to form by the Commissioner — or you post a cash bond or fixed-value equivalent instead.
Step by step
How to Get an Auto Dealer Bond in North Carolina: Step by Step
Confirm your license type and bond amount
North Carolina requires the bond for new, used, and wholesale dealer licenses alike: $50,000 for your first established salesroom plus $25,000 for each additional salesroom. If you will deal only in trailers with an empty weight of 4,000 lbs or less, you are exempt and file the bond-exempt certification (ISU-406) instead.
Set up your established salesroom
Your salesroom (or office, for wholesalers) must have at least 96 square feet in a permanent, enclosed building, a business sign in block letters at least 3 inches tall, and written proof it meets local zoning rules. An ISU officer inspects and approves the location before your license is issued.
Complete the dealer licensing course if you sell used vehicles
Used motor vehicle dealer applicants must finish a 12-hour licensing course within the 12 months before applying (G.S. 20-288). Some applicants are exempt, such as dealers whose primary business is selling salvage vehicles for insurers. Renewals require a 6-hour course for each year of the licensing period.
Get your North Carolina dealer bond
Buy your bond and we handle the paperwork. We issue your Motor Vehicle Dealer Surety Bond (ISU-409) in the correct amount for your number of salesrooms and provide it for your application. There is no bond form for you to download, complete, or sign.
Submit your application to the ISU Dealer Section
Complete the Application for New Dealer License (ISU-400) and file it with your bond, liability insurance certificate covering dealer plates, zoning verification, course certificate (used dealers), and the $97-per-location license fee to the NC State Highway Patrol Investigative Services Unit Dealer Section.
Application for New Dealer License or Changes to Existing License (ISU-400)Pass inspection and renew every year
An ISU officer inspects your salesroom before the license is issued. Dealer licenses run for one year, so renew your license annually and keep your bond active — the surety must give 30 days’ notice before non-renewal, and a lapsed bond can shut down your license.
Paperwork
North Carolina Dealer Bond Forms & Documents
The NCSHP dealer license application. You complete and submit this to the ISU Dealer Section.
View formThe North Carolina dealer surety bond form — we issue this in the correct amount for your salesrooms and provide it for your filing. There is nothing for you to complete.
View formOnly for dealers who sell nothing but trailers with an empty weight of 4,000 lbs or less — certifies you qualify for the bond exemption.
View formThe NCSHP checklist of salesroom, sign, zoning, insurance, and bond requirements — read this before you apply.
View formYou'll also need
Cost
How North Carolina Auto Dealer Bond Pricing Works
You do not pay the full bond amount. The $50,000 figure is the coverage — the most claims can collect. You pay a premium, which is a small percentage of that amount.
Your premium is set by underwriting, mostly your personal credit. Well-qualified applicants pay a low rate. The premium is separate from North Carolina’s $97-per-location license fee.
Each additional established salesroom raises your bond by $25,000, so a multi-location dealer pays a somewhat higher premium than a single-lot dealer.
Worked example
A North Carolina dealer with one salesroom needs a $50,000 bond. You do not pay $50,000 — you pay a premium, which is a percentage of that amount set mainly by your credit. A dealer adding a second salesroom posts $75,000 of coverage and pays a proportionally higher premium.
Filing
Filing Information
North Carolina State Highway Patrol — Investigative Services Unit (ISU), Dealer Section
Filing notes
File the bond with your dealer license application through the NC State Highway Patrol Investigative Services Unit (ISU) Dealer Section. The bond is written on the state Motor Vehicle Dealer Surety Bond form (ISU-409) and runs to the Commissioner of Motor Vehicles.
The bond is a continuous form — it stays in force until cancelled. The surety must give the license holder and the Commissioner at least 30 days’ written notice before non-renewing, so keep your premium current to avoid a lapse that can stop your license.
We issue your North Carolina Motor Vehicle Dealer Surety Bond (ISU-409) in the correct amount for your number of salesrooms and provide it for your application — there is no bond form for you to complete or sign.
North Carolina also accepts a cash bond or a fixed-value equivalent under G.S. 20-288(e); most dealers post the surety bond because it costs a small premium instead of tying up $50,000 in cash.
FAQ
North Carolina Auto Dealer Bond FAQ
Yes. Every North Carolina motor vehicle dealer — new, used, or wholesale — must have a $50,000 surety bond (or cash bond / fixed-value equivalent) on file to be licensed, plus $25,000 for each additional established salesroom (G.S. 20-288(e)).
$50,000 for one established salesroom, plus $25,000 for each additional salesroom. Manufacturers, factory branches, distributors, distributor branches, and wholesalers file the bond too.
Yes, one narrow group: license holders who deal only in trailers with an empty weight of 4,000 lbs or less. They file a Motor Vehicle Dealer Bond Exempt Certification (ISU-406) instead of a bond.
The NC State Highway Patrol Investigative Services Unit (ISU) Dealer Section. Dealer licensing moved there from the NCDMV License & Theft Bureau on July 1, 2025, and the old LT-series forms were renumbered as ISU forms (for example, the bond form LT-409 is now ISU-409).
Yes. G.S. 20-288(e) allows a cash bond or a fixed-value equivalent. Most dealers post the surety bond instead, because it costs a small premium rather than tying up $50,000.
You pay a premium, not the full $50,000. The premium is a small percentage of your bond amount, based mainly on your credit. Start a quote to see your rate.
The North Carolina bond form is continuous — it stays in force until cancelled, and the surety must give you and the Commissioner at least 30 days’ written notice before non-renewal. You can buy it on a 1, 2, or 3 year premium term; coverage stays in place as long as you renew.
Anyone harmed by fraud, a fraudulent representation, or a violation of North Carolina’s dealer laws (Articles 12 and 15 of Chapter 20) by you or your sales representatives. The bond pays valid claims up to its full amount, and you must repay the surety.
Sources
Last verified 2026-07-01. Requirements change - confirm current details with North Carolina State Highway Patrol — Investigative Services Unit (ISU), Dealer Section before you file. This page is informational and not legal advice.
FAQ
North Carolina Auto Dealer Bond Questions
The cost of a North Carolina auto dealer bond is usually a small percentage of the state-required bond amount. Your exact premium depends on the bond amount, license type, business details, and underwriting factors such as credit.
Many auto dealer bonds can be issued the same day after you complete the application. Larger bond amounts or applications that need underwriting review may take longer.
Requirements vary by license type, but most North Carolina auto dealers need to complete a short application and purchase the bond amount required by the state before their license can be issued or renewed.
Often, yes. Many states have separate bond requirements for wholesale, retail, broker, or other dealer license types. Choose the bond that matches your North Carolina license instructions.
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AutoDealersBond.com is operated by Shield Liability Insurance Agency, a California and Texas licensed insurance agency (CA License #6018195, TX License #3446536). Shield Liability Insurance Agency is not an insurance carrier and does not underwrite bonds or insurance policies. Bond and coverage availability, pricing, and issuance are subject to carrier underwriting approval, eligibility, applicable state requirements, and policy or bond terms. Availability varies by state.
