An auto dealer bond is a type of surety bond required for car dealerships to operate legally in many states. It serves as a financial guarantee that the dealer will comply with state laws and ethical business practices. This bond protects consumers from fraud, misrepresentation, and financial loss caused by a dealer’s actions. If a dealer fails to meet obligations—such as transferring titles or paying fees—customers can file a claim against the bond. The auto dealer bond builds trust between the dealer and the public, ensuring transparency in transactions. Bond amounts and requirements vary by state, but securing this bond is essential for obtaining or renewing an auto dealer license and running a compliant dealership.