Motor vehicle dealer bond or car dealer bond is a type of bond that all auto dealers have to obtain before they can start their businesses.
The goal of this type of bond is to provide protection to your customers. This means that in case of any fraudulent activities, such as selling faulty car parts or illegal license plate covers, the client will be protected.
Having the bond is itself a guarantee that the dealer is compliant with all the state and federal laws.
As an auto dealer starting out, you might have several questions. We at BondPro have tried to answer some common questions regarding auto dealer bonds. Read on:
Q. Why do I need to have a bond?
The car dealer bond is a necessary requirement for your dealership license. It helps portray you as an ethical business and inspires trust. Your customers will be more comfortable working with a bonded company.
Q. Will it protect me?
A surety bond is not supposed to protect you. Instead, it’s supposed to protect your customers. In case of any unethical practices, they can file a claim against you. You will be liable to pay for your customer’s losses.
Q. What do I have to pay to obtain the bond?
Typically, qualified applicants have to pay 1% of the total bond amount to get the car dealer bond. However, there are certain factors that might lead to variations. They are:
- Duration of the bond,
- Credit score,
- Scale of operations, etc.
Q. Can violation of any of the terms get me into trouble?
Yes, auto dealer bond is a legally binding contract. Violation of any of the terms can land you into legal trouble.From misrepresenting your merchandise to using unethical sales practices, you will have to steer clear of all kinds of contract violations.
Q. Can I get an auto dealer bond with bad credit?
A bad credit does not restrict you from obtaining your auto dealer bond. However, depending on how bad your credit score is, the price might increase.
Q. Will it be better if I hire professionals?
Yes, it will better to hire underwriters for obtaining a car dealer bond. From filling applications to submitting credentials, these professionals can take care of all the legwork, while you focus on other aspects of your business.
We at BondPro help clients get auto dealer bonds in Florida. With a team of experienced professionals, our surety bond agency helps car dealers get licensed and start operating as an ethical business.