Kentucky Auto Dealer Bond$15,000 - $100,000 Commission-Determined

Kentucky uses a unique financial qualification system under KRS 190.033. The Commission reviews your financial statement (TC 98-1, Pages 2 and 2A) including bank statements, unencumbered cash, and motor vehicle inventory. If you have $100,000 or more in liquid business assets, no bond is required. If you have $50,000 in unencumbered cash plus $50,000 in unencumbered inventory, no bond is needed. Otherwise, the bond amount equals the difference between $100,000 and your qualifying assets, with a minimum of $15,000. Unencumbered real estate owned by the applicant may also count toward the threshold.

Your annual premium depends on which bond amount the Commission assigns. For the $15,000 minimum bond, expect $150-$1,500 per year (1-10% based on credit). A $50,000 bond costs $500-$5,000 annually. The maximum $100,000 bond costs $1,000-$10,000 per year. Applicants with excellent credit (750+) typically pay 1-2%, while those with challenged credit may pay up to 10%. We can often find competitive rates even with credit scores below 600.

Kentucky allows dealers to request a bond reduction at renewal if their financial position has improved. Submit an updated financial statement (TC 98-1 Pages 2 and 2A) showing you now meet the $100,000 liquid asset threshold or a higher qualifying amount. The Commission reviews updated financials at its monthly meeting and can reduce or eliminate the bond requirement.

Kentucky requires permanent signage visible from the roadway with letters at least 9 inches in height. The trade name must incorporate words like "used cars," "auto sales," "auto mart," "motor sales," or similar wording identifying the business as a motor vehicle sales operation. Wholesale dealers are exempt from signage requirements. Failure to maintain proper signage can result in license suspension.

The Commission meets on the second Friday of each month at 9:00 AM at 105 Sea Hero Road, Suite 1, Frankfort, KY 40601. Applications must be received at least 10 working days before the monthly meeting to be placed on the agenda. If your application is incomplete or your financial statement is improperly completed, it will be delayed to a future meeting.

Kentucky offers licenses for: New Motor Vehicle Dealers, Used Motor Vehicle Dealers, Auction Dealers, Motorcycle Dealers, Mobility Vehicle Dealers, Motor Vehicle Leasing Dealers, Brokers, Wholesalers, Automotive Recycling Dealers, and Nonprofit Motor Vehicle Dealers. Each category requires the same financial qualification process, though auction dealers may face higher bond requirements at the Commission's discretion.

All Kentucky dealer licenses expire December 31st annually and must be renewed before expiration. Your surety bond must remain active for the entire license year. If your bond lapses or is canceled, the Commission will suspend your license. Reinstatement requires a new bond and potentially a new application with updated financial statements.

Kentucky mandates garage liability insurance with minimum coverage of $250,000 per person, $500,000 per occurrence, and $250,000 property damage per KRS 190.035. This is significantly higher than the national average because Kentucky law treats dealer lot liability as a higher-risk exposure. You must maintain this coverage for the entire license period, and your insurance certificate must name the Kentucky Motor Vehicle Commission.

Yes, but each physical location requires its own separate dealer license, surety bond (if applicable), insurance, and must independently meet all facility requirements including the 100 sq ft enclosed office, hard-surface display lot, customer parking, and 9-inch signage. The Commission evaluates each location's financial qualification separately.