Auto dealer bond in Texas: amount and cost
Independent Texas dealers file a $50,000 bond with each GDN license, for two years; with good credit it costs about $375 to $750 a year.
Auto dealer bond premium in Texas
$375 to $750
estimated, per year, for a $50,000 bond
| Bond the state requires | $50,000 |
| Which amount | Tex. Transp. Code § 503.033 (HB 3533, 2021) |
| Rate for credit 700 or higher | 0.75 % to 1.5 % a year |
| Term | 1 year, renewed yearly |
Estimate from published rate grids, not a quote. Tex. Transp. Code § 503.033 (HB 3533, 2021). Amount read on the official page, October 22, 2026.
Compiled by Radif Partners · Method and sources · rule read October 22, 2026
Texas requires a $50,000 motor vehicle dealer surety bond with every new and renewal application for an independent General Distinguishing Number, the dealer license issued by the Texas Department of Motor Vehicles. The amount doubled from $25,000 when House Bill 3533 took effect on September 1, 2021, and the TxDMV dealer manual states it in one line. Franchised new car dealers and trailer-only licenses are exempt. The GDN, and so the bond, runs two years. The bond protects buyers and the state when a dealer fails to transfer a title, pay off a trade-in lien or remit fees. Its price depends mostly on the owner's credit: on published dealer grids, about $375 to $750 a year with a score of 700 or more, $1,250 to $2,500 between 600 and 649, and $3,750 to $5,000 under 550. Rule read on October 22, 2026.
Who needs the $50,000 bond
Any independent motor vehicle dealer licensed through a GDN, that is, a used car dealer without a manufacturer franchise, must file it. The TxDMV manual says that "all new and renewal GDN license applications must be submitted with a $50,000 Motor Vehicle Dealer Surety Bond". Franchised dealers, whose franchise agreement and separate license carry their own obligations, are exempt, and so are dealers licensed only for trailers or semitrailers. Wholesale dealers selling only to other dealers hold a different license class and should check its rule.
The bond is filed on the state's form, with the dealer's exact legal name and assumed name as they appear on the application. A mismatch between the bond and the license application is a frequent cause of delay.
Why it doubled in 2021
For years Texas asked $25,000. House Bill 3533 raised it to $50,000 from September 1, 2021. The bond amount caps what all claimants together can recover from the surety, so a larger bond means more buyers can be made whole when a dealer fails. It also means a larger premium and a stricter review for owners with weak credit.
The Texas dealer bond across credit scores
Premium for a $50,000 bond, credit 650 to 699
$500 to $1,500
| Rate range | 1 % to 3 % |
| Best tier (700 or higher) | $375 to $750 |
| Lowest tier (under 550) | $3,750 to $5,000 |
Paying for two years
Because the license runs two years, many sureties price the Texas dealer bond for the full term in one payment. On the multi-year factor of the grid we read, two years cost about 1.5 times one year: $563 to $1,125 with good credit. Others bill yearly. Compare quotes on the same term. The dealer bond overview compares Texas with California and the other states read, and the bad credit page explains what dealers with low scores pay.
A dealer who adds a second location in Texas applies for a separate GDN for it, and each GDN carries its own bond, priced separately by the surety.
The Texas rule as read
| Item | Value |
|---|---|
| Bond amount | $50,000 |
| Amount before the change | $25,000 |
| Term | 2 years |
| Rule | Tex. Transp. Code § 503.033 (HB 3533, 2021) |
| Line read | “all new and renewal GDN license applications must be submitted with a $50,000 Motor Vehicle Dealer Surety Bond” |
| Page | www.txdmv.gov |
| Read on | October 22, 2026 |