Texas Auto Dealer Bond

Learn more about Texas auto dealer bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.

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What Are They?

A Texas auto dealer license is referred to as a GDN, which stands for General Distinguishing Number. A GDN is a unique identifier that distinguishes a given dealer’s license from all others. In order to obtain a GDN, the dealer must first purchase a surety bond. Dealers who have more than one GDN must purchase a separate surety bond for each of them.

Dealer bonds provide protection for the Texas Department of Motor Vehicles and for consumers who could suffer a financial loss as a result of the illegal or unethical conduct of a licensed dealer of cars and/or other motor vehicles.

• Bond Penalty Amount: $25,000
• Bond Term: 2 year

Who Needs Them?

All licensed dealers with a GDN will be required to obtain a surety bond with the Texas Department of Motor Vehicles.  We provide surety bonds in all Texas cities including Dallas, Houston, Austin, San Antonio, Fort Worth and ever place in between!

Texas licenses auto or motor vehicle dealers in several different categories. Anyone applying for any of these types of motor vehicle dealer licenses must be bonded.

• Independent Motor Vehicle dealers who buy, sell, or exchange used cars, trucks, motor home, and neighborhood vehicles
• Independent Motorcycle Dealer who buy, sell, or exchange used motorcycles, motor scooters or ATVs
• Wholesale Vehicle Dealers who sell or exchange used (cars, trucks, motorcycles, and/or travel trailers) only with other licensed dealers
• Wholesale Motor Vehicle Auctioneers who offer vehicles for sale by bid only to other licensed dealers at a bona fide auction at a permanent location
• Independent Mobility Motor Vehicle Dealers who sell new mobility motor vehicles (vehicles designed and equipped to transport people with disabilities)

In Texas, dealers selling new motor vehicle must have a franchise agreement with a manufacturer and meet a number of other requirements in order to obtain a GDN.

How Do They Work?

The terms of a motor vehicle dealer bond require the dealer (the principal in the bond contract) to operate in accordance with relevant state laws and regulations. Failure to do so can result in a claim against the bond. ​

The company that underwrote and issued the bond (the surety in the bond contract) will investigate any claim and ensure that it is valid. The surety will then extend credit to the dealer and pay the claim on the dealer’s behalf. The indemnity clause that is part of the bond contract makes the dealer legally responsible for repaying the surety for the amount paid out to the claimant.

What Do They Cost?

The state of Texas (the obligee in the auto bond contract) has set the required amount of each auto dealer bond at $25,000. But the dealer pays only a small percentage of that amount. You can expect to pay between $275 and $2,000 for a 2-year bond. After you complete an application, one of our representatives will email and call you back with a quote typically within 1 business day.  Financing might also be an option for those with less than great credit.

How Do I Purchase The Bond?

You can start the application process online through our convenient application form. Once completed, you will be contacted by a bond representative within 24 hours. Then, once you purchase the bond from Absolute Surety, you will need to sign it and mail it along with the attached power of attorney to:

Texas Department of Motor Vehicles

Motor Vehicle Division

P.O. Box 26487

Austin, Texas 78755

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Let us help you get the dealer bond you’ll need to obtain your GDN for your Texas auto dealership.

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