Auto Dealer Bonds

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Instill Trust and Safeguard Customers

Motor vehicle dealers work with customers on the basis that the information they’re sharing is true and accurate. State governments trust that auto dealers will pay relevant taxes. But sometimes trust can be misplaced. To protect consumers and other parties against loss, harm, or other issues, auto dealers are required to take out surety bonds. These could be called auto dealer bonds, motor vehicle bonds, car dealer bonds, or DMV bonds.

How Does a Motor Vehicle Dealer Bond Work?

Motor Vehicle Dealers need to carry a bond to ensure that a buyer can secure a clear title to the vehicle they purchase while also protecting clients against potential legal and ethical issues. Auto dealer bonds are a kind of surety bond and they focus on protecting a dealer’s customers and other third parties. Commercial insurance is a form of protection that can benefit the dealer as well. In the event of a dispute or violation, both could be necessary. In the case of bonds, a third-party guarantor provides a financially-backed guarantee that the auto dealer will comply with legal and ethical standards. Besides consumers, sellers, lenders, creditors, and state legislators are also able to file a claim under a surety bond for various reasons.

Who Is Considered a Motor Dealer?

While laws vary from one state to another, auto dealers are generally required to carry surety bonds before obtaining their license. Those who qualify as an auto dealer could operate on a wide spectrum. States’ definitions vary but in general, individuals who buy or sell 2-6 motor vehicles a year need a license to do so, and so are considered dealers. They would thus need to have valid bonding and licensure to carry out business. Exceptions to the above rule include those buying or selling vehicles for personal use only, financial or governmental organizations acting in their official capacity, or trustees in a court case.

Depending on the state in which they do business, franchise dealerships, independent used vehicle dealerships, wholesale dealerships, motor vehicle auctions, salvage dealerships, and mobile home/trailer/motorsports/RV dealerships may need to obtain auto dealer surety bonds. 

How Much Does An Auto Dealer Bond Cost?

As with other surety bonds, price varies widely. It depends on individual factors, the weightiest of which is often the applicant’s credit history, with the dividing line somewhere around a credit score of 700. Beyond credit history, time in business, specific industry history, financial health, and length of the bond’s term can have a bearing on price, especially for bonds of a higher value. Auto dealers looking to secure a bond could pay anywhere from .5-10% or more of the total bond price, with that total often being stipulated by the state government. For a standard $25,000 motor vehicle bond, pricing can vary anywhere from $250 to $2,500 and above. If an underwriter is not needed, and bonds are instant-issue–like they are at BK Insurance & Financial Services, Inc.–then the rate is generally lower. 

If a claim is made against a bond, remember that the bond holder could be responsible for the full sum. While auto dealer bonds could feel like an unnecessary hardship for dealers, they help to regulate the industry and protect the consumer.

Get a Surety Bond in Minutes

  • Choose from the widest selection of instant issue bonds
  • Apply online now and be approved in minutes
  • Available in all 50 states, from Alaska to Virginia
  • Need help? Speak with a live person in chat

Submit some basic information and just moments later you could have a bond approval–evaluation, qualification, and underwriting are all handled quickly and conveniently. Our rapid approval service is available in all 50 states for a wide variety of surety bonds. No matter where you do business–from Tennessee or Florida to Nevada or Utah–we can help. Use our easy search feature to sort available bonds by state or keyword, then select the specific bond that’s best for your business. If you’re having any trouble finding what you need, feel free to ask questions to our live team that’s ready to chat. These skilled surety bond experts can help you to meet all applicable requirements and get you back to handling your business.

Propeller Bonds - is our partner who works directly with our customers to write auto dealership bonds.


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