Dealer Surety Bond in Texas: $25,000 Requirement

Texas requires all licensed dealers to maintain a $25,000 surety bond. Here is exactly what you need, what it costs, and what happens when a claim is filed.

Bond Requirement at a Glance

Required Bond Amount$25,000

Issuing AuthorityTexas Department of Motor Vehicles (TxDMV) Motor Vehicle Division

Estimated Annual Cost$125–$375/year (0.5%–1.5% of bond face value)

Minimum for independent dealers. Franchise dealers may require higher amounts tied to inventory floor-plan.

Who Needs a Surety Bond in Texas

Required for all licensed dealers, wholesale dealers, and vehicle storage facilities.

Independent motor vehicle dealer
Wholesale dealer
Franchised dealer
Motorcycle dealer
Converter dealer

How to Get a Bond in Texas

Where to get it: Any surety company authorized to do business in Texas (Zurich, Travelers, AmTrust)

Bond form GDN-Bond must be TxDMV-approved. File via eLICENSING portal with bond attached.

Annual Premium Cost

$125–$375/year (0.5%–1.5% of bond face value)

Texas dealers with poor credit may pay 3%–5%, or $750–$1,250/year. Consider credit repair before applying.

How Claims Work

Injured buyer files with TxDMV or directly with surety. TxDMV investigation required before surety pays.

Texas has a separate Lemon Law fund; surety bonds cover fraud/title defects, not manufacturing defects.

Penalties for Operating Without a Bond

License denial or suspension. Operating without bond: Class B misdemeanor, up to 180 days jail.

Texas-Specific Note

GDN (General Distinguishing Number) license is required before any vehicle sale. Bond is filed with GDN application.

Texas-Specific Facts for Dealer Surety Bond

Texas Vehicle transfer fees and requirements

In Texas, the title transfer fee is $33 and registration costs $50.75 per year. Vehicle sales are subject to 6.25% motor vehicle sales tax on purchase price. Texas does not require notarization for private-party vehicle transfers. Emission testing is required in Texas — verify the vehicle passes before completing the sale.

Annual safety inspection required; emissions testing in select counties
Title transfer within 30 days at county tax office
Form 130-U required for title transfer
Standard Presumptive Value (SPV) used for tax assessment on private sales

Official Texas bill of sale form

The official Texas bill of sale form is Form 130-U (Application for Texas Title and/or Registration). BillOfSaleNow generates a document that meets all Texas requirements and can be used in place of the official form.

Texas sales tax on vehicle purchases

Texas has a 6.25% state sales tax rate. Flat 6.25% motor vehicle sales tax statewide. Private-party vehicle sales in Texas are subject to sales tax. Tax based on Standard Presumptive Value (SPV) or purchase price, whichever is higher. The title transfer fee is $33.

Texas bill of sale statistics

BillOfSaleNow has generated 10,842 bill of sale documents for Texas transactions, with 292 generated this month alone. The most popular vehicle type is car.

More Texas Vehicle Guides

Each guide is written specifically for Texas laws, agencies, and procedures. Bookmark for future reference.

Frequently Asked Questions

How much is a dealer surety bond in Texas?

Texas requires a $25,000 surety bond for licensed dealers. Minimum for independent dealers. Franchise dealers may require higher amounts tied to inventory floor-plan.

Who requires a dealer surety bond in Texas?

Texas Department of Motor Vehicles (TxDMV) Motor Vehicle Division requires the bond. Required for all licensed dealers, wholesale dealers, and vehicle storage facilities.

How much does a dealer surety bond cost annually in Texas?

Expect to pay $125–$375/year (0.5%–1.5% of bond face value). Texas dealers with poor credit may pay 3%–5%, or $750–$1,250/year. Consider credit repair before applying.

What happens if a Texas dealer doesn't have a surety bond?