Overview
A sales finance company bond is the surety bond a state requires of a company licensed to buy and hold retail installment contracts, such as the financing a dealer originates on a car or other retail purchase. The bond guarantees that the company will follow the state's sales finance law, including its disclosure rules and the handling of borrower accounts.
State regulators set the required amount. Because the bond guarantees compliance rather than insuring the company, underwriting reviews the owners' credit and the company's financial strength.
It is a surety bond that protects borrowers and the state. A borrower or regulator harmed by a violation can claim against the bond, and the company reimburses the surety under the indemnity agreement.
Who needs this bond
Sales finance companies and retail installment financers licensed in states that condition the license on a posted bond.
Typical amount and term
Bond amount is set by each state's regulator. Premium runs 1 to 3 percent of the bond amount for well-qualified companies. Term is usually one to three years.
What this bond costs
Your premium is a small percentage of the bond amount, set by underwriting. The biggest drivers:
- The state-set bond amount
- The owners' personal credit
- The company's financial statements and time in business
- The number of states licensed
| Scenario | Bond amount | Estimated premium |
|---|---|---|
| Established company, strong credit | $25,000 bond | around 1 to 2 percent per year |
| Multi-state company | $50,000 bond | around 1.5 to 3 percent per year |
| Newer company, limited history | $25,000 bond | rate is higher until a track record is built |
Figures are illustrative premium ranges, not quotes or statutory amounts. Your rate depends on the bond amount your obligee requires and your underwriting profile.
What you will need
- State of license and license or application number
- Two years of business financials
- Owner credit authorization
How to apply
- Send your state, license type, and the required bond amount
- Receive a per-state quote within one business day
- Sign and pay, then we file the bond with the regulator
How a surety bond differs from insurance
A sales finance company bond is a surety guarantee that protects borrowers and the state, not the company. It is separate from insurance on the company's own losses. The bond backstops compliant financing, and the company repays the surety for any paid claim under the indemnity agreement.
Frequently asked questions
What does a sales finance company bond cover?
It guarantees the company follows the state's sales finance law when it buys and holds retail installment contracts, and gives harmed borrowers and the regulator a way to recover up to the bond amount.
How is the bond amount set?
By each state's regulator, so the required amount varies from state to state.
Do I need a bond in every state?
Generally yes. The bond is tied to each state license, so a multi-state company posts a bond in each one.
What drives the premium?
Mainly the bond amount, the owners' credit, and the company's financial strength. The figures here are illustrative, not a quote.
More finance and lending bonds
Reviewed by the Cornerstone Surety bond team. Last reviewed 2026-06-17.