Director of Tennessee Motor Vehicle Commission - Motor Vehicle Dealer Bond
Required for used motor vehicle dealers in Tennessee to obtain and maintain their dealer license from the Tennessee Motor Vehicle Commission.
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About This Bond
The Director of Tennessee Motor Vehicle Commission - Motor Vehicle Dealer Bond is a surety bond required for used motor vehicle dealers operating in Tennessee. This bond ensures compliance with state regulations governing the sale of used vehicles and protects consumers from fraudulent or unethical business practices.
Used motor vehicle dealers in Tennessee must obtain this bond as part of their licensing requirements with the Tennessee Motor Vehicle Commission. The bond applies specifically to dealers who sell used vehicles only, as opposed to new vehicle franchised dealers who have different bonding requirements.
The bond protects the Director of Tennessee Motor Vehicle Commission and the general public by providing financial recourse if the dealer violates state motor vehicle laws, engages in fraudulent practices, or fails to fulfill contractual obligations to customers. Claims against the bond may arise from issues such as failure to transfer titles properly, misrepresentation of vehicle condition, or violation of consumer protection laws.
This bond is issued in the amount of $50,000 and has a term length of 2 years. The bond is renewable, allowing dealers to maintain continuous coverage as required for license renewal and ongoing compliance with Tennessee motor vehicle dealer regulations.
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At a glance
Tennessee Auto Dealer Bond Key Facts
Governed by Tenn. Code Ann. § 55-17-111(g).
The basics
What Is an Auto Dealer Bond in Tennessee?
A Tennessee auto dealer bond is a $50,000 surety bond you must file with the Tennessee Motor Vehicle Commission (TMVC) to get or keep a motor vehicle dealer license. Tennessee law calls it a Motor Vehicle Dealer Surety Bond (Commission form IN-1316). You need a dealer license — and this bond — if you sell, or offer to sell, more than five motor vehicles in a year in Tennessee, whether cars, trucks, RVs, or motorcycles, new or used.
Good to know - Required for every Tennessee motor vehicle dealer. You must be licensed by the Tennessee Motor Vehicle Commission if you sell, or offer to sell, more than five motor vehicles in a year — cars, trucks, RVs, or motorcycles, new or used. The bond amount is a flat $50,000 for all dealer types, and motor vehicle auctions post the same $50,000 bond.
The bond is a promise that you will follow Tennessee’s motor vehicle laws and pay valid claims. If you fail to pay a customer’s prepaid title, registration, or tax money over to the state, or you fail to deliver a clear vehicle title free of prior owners’ interests and liens, the person harmed — including the State of Tennessee — can file a claim against your bond, up to the full $50,000.
The bond protects your customers and the public, not you. If the surety company pays a claim, you must pay it back. The bond is required on top of your license fees, and it must stay in force the whole time you hold a dealer license.
The amount is a flat $50,000 for every dealer type — new, used, franchise, RV, and motorcycle dealers all post the same amount, and motor vehicle auctions do too. A letter of credit is not accepted. If you do not use a corporate surety, the Commission can accept a certificate of deposit equal to the bond amount instead.
Qualification
What You Need to Qualify for a Tennessee Auto Dealer Bond
Approval depends on your dealer license type, required coverage amount, and underwriting factors such as credit.
- You sell, or offer to sell, more than five motor vehicles in a year in Tennessee, so you must be licensed by the Tennessee Motor Vehicle Commission (TMVC) — this covers cars, trucks, RVs, and motorcycles, new or used.
- You have an established place of business that meets TMVC rules: a permanent building of at least 288 square feet with a working restroom, plus a display lot that fits at least 15 vehicles (no private residences or temporary lots).
- Your $50,000 bond is written by a surety company licensed to do business in Tennessee, on the Commission’s IN-1316 form, in the exact legal name and address of your dealership.
- You can keep the bond in force without a lapse for as long as you are licensed — Tennessee requires 60 days’ notice before a bond can be canceled.
- You have your business details ready — legal entity name, ownership, and Tennessee business location — matching the name on the bond and the application.
Step by step
How to Get an Auto Dealer Bond in Tennessee: Step by Step
Confirm you need a Tennessee dealer license
Tennessee requires a Motor Vehicle Commission dealer license — and the $50,000 bond — if you sell, or offer to sell, more than five motor vehicles in a year. This includes cars, trucks, RVs, and motorcycles, whether new or used.
Set up an established place of business
Line up a permanent dealership location that meets TMVC rules: a building of at least 288 square feet with a working restroom, plus a display lot that holds at least 15 vehicles. Private residences and temporary lots are not allowed.
Get your $50,000 dealer bond
Buy your bond and we handle the rest. We issue your $50,000 Motor Vehicle Dealer Surety Bond on the Commission’s official IN-1316 form and provide the signed original for your application package. There is no bond form for you to download or complete.
Complete the Initial Motor Vehicle Dealer Application
Fill out the Initial Motor Vehicle Dealer Application online through the state’s CORE portal (core.tn.gov) and pay the $600 application fee. Submit all of your supporting documents before the facility inspection.
Initial Motor Vehicle Dealer ApplicationPass the on-site facility inspection
Once your documents are in, the Commission inspects your dealership location. After the inspection, it does a final review of your application, background, and facility findings before issuing the license.
Keep your bond and license active
Tennessee issues the dealer bond on a two-year cycle that matches your license period. Renew before it ends so your coverage never lapses, since the bond must stay in force the whole time you are licensed.
Paperwork
Tennessee Dealer Bond Forms & Documents
The Commission’s official $50,000 dealer bond form. We issue your bond on this form and provide the signed original for your application — you don’t fill it out.
View formThe dealer license application. You complete this online through the state’s CORE portal (core.tn.gov).
View formThe Commission’s checklist of facility, bond, and document requirements — review it before you apply.
View formYou'll also need
Cost
How Tennessee Auto Dealer Bond Pricing Works
You do not pay the full $50,000. That amount is the coverage — the most a claim can collect. You pay a premium, which is a small percentage of the $50,000, set by underwriting.
Your rate depends mostly on your personal credit and business history. Well-qualified applicants pay a low percentage; higher-risk applicants pay more. The bond premium is separate from the Commission’s $600 application fee and any other state licensing fees.
A letter of credit cannot replace the bond. Tennessee does let you post a certificate of deposit equal to $50,000 in place of a corporate surety bond, but most dealers buy the bond because it costs only a fraction of that amount up front.
Worked example
Tennessee’s dealer bond is a flat $50,000. You do not pay $50,000 — you pay a premium on that amount, often a few hundred dollars a year for well-qualified applicants. Start a quote to see your exact rate.
Filing
Filing Information
Tennessee Motor Vehicle Commission (Department of Commerce & Insurance)
Filing notes
Your $50,000 bond must be on the Commission’s official form (Motor Vehicle Dealer Surety Bond, IN-1316), signed by the principal owner, with a power of attorney attached, and it must match your dealership’s legal name and address.
Tennessee issues the dealer bond for two consecutive years to match your license period. Coverage must stay continuous, and a surety must give the Commission 60 days’ notice before canceling a bond.
We issue your bond on the IN-1316 form and provide the signed original for your Initial Motor Vehicle Dealer Application — you don’t complete the bond form yourself.
FAQ
Tennessee Auto Dealer Bond FAQ
Yes. Every licensed Tennessee motor vehicle dealer must keep a $50,000 corporate surety bond on file with the Motor Vehicle Commission (Tenn. Code Ann. § 55-17-111(g)).
It is a flat $50,000 for all dealer types — new, used, franchise, RV, and motorcycle dealers — and motor vehicle auctions post the same $50,000 bond. You pay a premium, not the full amount.
Anyone who sells, or offers to sell, more than five motor vehicles in a year in Tennessee, including cars, trucks, RVs, and motorcycles, whether new or used, must be licensed by the Motor Vehicle Commission and post the $50,000 bond.
The Motor Vehicle Dealer Surety Bond, Commission form IN-1316. We issue your bond on this official form and provide the signed original for your application — there is nothing for you to fill out.
Tennessee issues the dealer bond for two consecutive years to match your license period. Coverage must stay continuous, and a surety must give the Commission 60 days’ notice before canceling the bond.
You pay a premium, not the full $50,000. The premium is a small percentage of the coverage, based mainly on your credit and business history. Start a quote to see your exact rate.
A letter of credit is not accepted. The Commission can accept a certificate of deposit equal to $50,000 in place of a corporate surety bond, but most dealers buy the bond because it costs only a fraction of that amount.
You submit the signed original bond with your Initial Motor Vehicle Dealer Application to the Tennessee Motor Vehicle Commission (the application is completed online at core.tn.gov). We provide the original bond for your application package.
Sources
Last verified 2026-07-01. Requirements change - confirm current details with Tennessee Motor Vehicle Commission (Department of Commerce & Insurance) before you file. This page is informational and not legal advice.
FAQ
Tennessee Auto Dealer Bond Questions
The cost of a Tennessee 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 Tennessee 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 Tennessee 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.
