Who requires it
Municipal licensing authority (city or town) — Class 2 motor vehicle dealer licenses
License & permit · Massachusetts
Massachusetts Used Motor Vehicle Dealer Bond
Massachusetts Class 2 used motor vehicle dealers must post a twenty-five-thousand-dollar surety bond—or equivalent proof of financial responsibility—under G.L. c. 140 § 58. The instrument runs for the benefit of retail buyers who suffer defined losses from title, payment, odometer, warranty, or deceptive-practice failures. Each distinct business name and each city or town where the dealer maintains a place of business needs its own bond. Municipal licensing authorities issue and renew Class 2 licenses and receive the bond or collateral filing.
Common bond amount
$25,000
Fixed Class 2 amount per business name and per city or town; CD or irrevocable letter of credit may substitute when the municipal authority allows.
How you file
File with the city or town licensing authority; surety, or accepted CD / irrevocable letter of credit
Renewal
Keep continuous with the Class 2 license; 30-day cancel notice; restore within 10 days
Who requires it
Applicants and licensees for a Massachusetts Class 2 used car dealer license whose principal business is buying or selling second-hand motor vehicles. Class 1 new-vehicle dealers are licensed under a different subsection of § 58 and are not placed on the Class 2 bond schedule by that Class 2 provision—confirm with the municipal licensing authority if a Class 1 location also needs separate Class 2 security for used-vehicle activity. Class 3 junk licenses are outside this guide.
How much is required
Section 58(c) fixes a twenty-five-thousand-dollar surety bond executed by a company authorized in Massachusetts, or equivalent collateral the municipal licensing authority accepts—typically a certificate of deposit or irrevocable letter of credit equal to the bond amount. The amount does not scale with inventory or sales volume. A separate instrument is required for each different name under which the dealer conducts business and for each city or town where the dealer has a place of business.
How to get and file it
Have an authorized surety issue a twenty-five-thousand-dollar Class 2 dealer bond in the exact legal name and city or town shown on the municipal license application, or arrange a qualifying certificate of deposit or irrevocable letter of credit if the local licensing authority allows that alternative. File the original with the city or town that licenses the location and keep a copy for your records. Keep the bond or collateral in force for the entire Class 2 license term. Sureties must give the municipal licensing authority thirty days’ notice of cancellation; after notice of cancellation the dealer generally has ten days to restore coverage or the Class 2 license is revoked. Replace coverage before any gap, and file a new bond when adding a business name or a location in another city or town.
Cost note
Twenty-five thousand dollars is the required bond (or CD/ILC) amount per name and municipality, not the premium you pay. See bond amount vs premium. Bond amount vs premium →
Requirement checklist
- Required amount
- $25,000 surety bond or equivalent proof of financial responsibility
- Authority
- G.L. c. 140 § 58(c) Class 2 used motor vehicle dealer licensing
- Filing
- Municipal licensing authority for each city or town of business
- Separate instruments
- One bond (or equivalent) per business name and per city or town location
- Alternatives
- Certificate of deposit or irrevocable letter of credit may be accepted in lieu of surety
Related resources
Frequently asked questions
Does a Class 1 new-car dealer need this $25,000 bond?
The twenty-five-thousand-dollar schedule in § 58(c) is written for Class 2 used motor vehicle dealers. Class 1 dealers are licensed under a different classification. If a Class 1 location also conducts used-vehicle activity that the municipality treats as Class 2, confirm locally whether a separate Class 2 bond is required—do not assume Class 1 sits on the Class 2 bond schedule.
Can I use one bond for two towns or two trade names?
No. Section 58 requires a separate bond for each different name under which the dealer conducts business and for each city or town where the dealer has a place of business. Adding a DBA or a second municipality means posting another instrument.
Related Massachusetts bond guides
Mortgage Broker / Lender Bond
$75,000 (broker); $100,000–$500,000 (lender)
Massachusetts mortgage brokers licensed under G.L. c. 255E keep a seventy-five-thousand-dollar surety bond that stays in force while licensed. Mortgage lenders post a surety sized to Massachusetts residential loan volume—one hundred thousand, two hundred fifty thousand, or five hundred thousand dollars—under Division of Banks Regulatory Bulletin 5.2-101 and 209 CMR 42.00. Bonds are filed electronically through NMLS. A firm that holds both a broker and a lender license must keep both bonds in force. Mortgage loan originators are ordinarily covered by the sponsoring company’s bond; an individual twenty-five-thousand-dollar bond applies only when that coverage is unavailable.
Money Transmitter Bond
$100,000–$500,000
Massachusetts money transmitters licensed under the Money Transmission Act, G.L. c. 169B, must maintain a surety bond satisfactory to the Commissioner of Banks. Section 9 sets the amount at the greater of one hundred thousand dollars or one hundred percent of the licensee’s average daily money transmission liability in the commonwealth for the most recently completed three-month period, capped at five hundred thousand dollars. The Division of Banks administers the license and security requirement.
Debt Collector Bond
$25,000
Massachusetts debt collectors licensed under G.L. c. 93 §§ 24–26 must maintain a twenty-five-thousand-dollar surety bond running to the state treasurer. Section 25 fixes that sum and conditions the bond on turning collection proceeds over as agreed. Licensing and related rules appear in 209 CMR 18, and applications run through the Division of Banks on NMLS. The Commissioner may require additional security when circumstances warrant.
Credit Services Organization Bond
$10,000+
A Massachusetts credit services organization may not charge or receive money before fully performing agreed services unless it maintains a surety bond of at least ten thousand dollars and has established a trust account at a federally insured bank or savings and loan association located in the commonwealth. G.L. c. 93 § 68B states that dual requirement. Organizations that do not take advance fees are outside the bond trigger in that section.
Surety basics (not repeated here)
Universal surety concepts explained once—linked here instead of repeated on every state or bond page.
Continue with a Massachusetts application
Massachusetts will be preselected. Choose your bond type in the application—we confirm the correct product against your agency form before anything is issued.
Last verified 2026-08-11. This guide is based on verified educational content and official sources.
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