Arizona considers anyone who sells more than four motor vehicles a year to be an auto dealer and requires them to obtain an Arizona auto dealer license. Purchasing an Arizona vehicle dealer bond is a key part of the licensing process.
The purpose of the bond is to protect the state and consumers from financial loss caused by dealers who conduct their business in an unlawful or unethical manner. By purchasing this kind of surety bond, you’re guaranteeing that you will operate your business in accordance with all relevant Arizona laws.
Who Needs Them?
There are three types of Arizona dealer bonds. These have different required bond amounts for different types of dealers:
New Motor Vehicle
Used Motor Vehicle
Public Consignment Auction Dealer
Wholesale Auto Auction Dealer
Wholesale Motor Vehicle Dealer
If your business falls into any of these categories, you will need to obtain the appropriate bond in order to acquire or renew a vehicle dealer license.
How Do They Work?
The three parties in the bond contract are:
The Arizona Department of Transportation, Dealer Licensing Services is the obligee requiring the bond
The dealer is the principal purchasing the bond
The surety is the company issuing the bond
Anyone who suffers a financial loss as the result of a dealer’s failure to comply with the terms and conditions of the bond has the right to file a claim. The surety will evaluate the claim and determine whether or not is valid. The surety will subsequently advance payment of a valid claim to the claimant, then collect reimbursement from the principal.
What Do They Cost?
You will pay only a small percentage of the required bond amount as the premium to purchase the bond. For people with good credit, that will be in the range of 1% to 5%, or $1,000 to $5,000 per year for a new or used vehicle dealer. For individuals with lower credit ratings, we can still offer the most competitive premiums with financing sometimes an option.
The Arizona Motor Vehicle Division of the Department of Transportation establishes the requirements for auto dealer licensing. For a guide to the dealer licensing process in Missouri, view our blog post here.
At Absolute Surety, our vast experience and professional staff make us the ideal choice to meet your bonding needs. Use our convenient online form to apply for an Arizona Auto Dealer Bond today!
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Kevin McElroy, Performance One Electrical Services, Inc.