Before a car dealer can get a license for a dealership,they must file for a surety bond with the state’s Department of Motor Vehicles (DMV). Once they have their car dealer or auto dealer bond, they can apply for obtaining their business license.
Car Dealer Bond
An auto dealer bond is a type of commercial surety bond that is required by most states in the United States.
A car dealer bond provides protection to the car dealer’s customers. For instance, it guarantees that the car dealer will not commit frauds, such as selling substandard car parts. In cases of default, the buyer can file for financial compensation.
Car dealer bonds also ensure that the dealer will be following all the state’s rules and regulations and will be honestly fulfilling their financial obligations.Failure to do that will invoke the surety bond and will require the dealer to pay penalty within a given time frame. Failure to do so might lead to cancellation of license.
Cost of Auto Dealer Bond
The price of a surety bond will depend on a variety of factors. Here are some of them:
- The surety bond amount,
- The dealer’s credit score,
- Financial credentials,
- Previous business experience, and so on.
Typically, if your financial credentials are sound and credit score is reasonable, the bond premium can be about 1 percent to 4 percent of the bond amount.
Are you interested in receiving a quote? Get in touch with us now to get a free, no-obligation car dealer bond quote.
Requirements for a Car Dealer Bond
Surety providers in different states might require different prerequisites. Here are some general requirements:
Obligee’s Name: Generally, it is state Government’s Department of Motor Vehicles (DMV) that needs you to have the bond.
Bond Form:This is the form that contains all the rules and legalities of the bond. We at Bond Pro will provide you with this form and will help you fill it with accurate details.
Penalty Amount:Depending on your business, financial credibility, etc., bond amount will be decided by the DMV.
Now that you know what a car dealer bond is and why you need it, it’s time to get started! We at BondPro are a surety bond agency that provides car dealer bonds across all 50 states and U.S. Territories. Here’s how it works:
- Contact us with your request and answer some basic questions. Our car dealer bond agents will tell you about the requirements and provide you with a quote.
- After this, you will fill out an application form. You will also need to provide your financial statement.
- Once we have received all the documents from your side, we start with the underwriting process.
- Finally, you pay the premium and get your auto dealer bond.
We are a diligent team of professionals. With immense experience in the field, we provide only the best rates. Contact us or visit our offices for more information.