FOR ALL YOUR SURETY BOND NEEDS.
These surety bonds are general for all states.
Learn more about auto dealer surety bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
Auto dealer bonds are a form of license and permit bond designed to protect consumers against financial loss due to the actions of an auto dealer. Depending on the state, there may be different types of auto dealer surety bonds for dealerships selling different types of vehicles—such as new cars, used cars, motorcycles, mobile homes, recreational vehicles, and/or salvage vehicles. The bond must remain in force to avoid suspension or revocation of the dealership’s business license.
Anyone obtaining or renewing a license to operate a retail or wholesale dealership in a state that requires auto dealer bonds must purchase the appropriate type of bond in order to do business legally in that state. Different states have different requirements for different types of motor vehicle dealerships. When you begin the process of becoming licensed as an auto dealer of any kind, the agency you’re dealing with should tell you if you need a surety bond.
When you buy an auto dealer bond, you’re making a pledge that you will operate in accordance with all relevant laws and that neither consumers nor the state agency that licenses auto dealers will suffer any financial loss due to your actions.
The three parties involved are:
If the dealer commits a fraudulent act, such as selling a car without revealing that it was submerged in floodwaters at some point, the consumer can file a claim against the bond. The surety company will investigate to determine whether the claim is valid and will pay the consumer if it is. This prevents the state from being sued by the consumer for the dealer’s violation of applicable rules and regulations. The auto dealer is responsible for repaying the surety the full amount of the payout made to the consumer.
One key cost factor is the amount of the bond, which is dictated by the obligee—the state DMV. The other factor is the premium rate. This surety determines this rate based on the applicant’s credit history as well as both the dealer’s personal financial condition and the dealership’s business financials. The better that financial picture is, the lower the premium rate.
Multiplying the bond amount by the premium rate gives you the annual premium that must be paid to obtain the motor vehicle bond. Most premiums will start around .5% for a 1 year term. Discounts are sometimes available on 2-year options.
Use our convenient search tool to find out the auto dealer surety bonds required in your state, and submit an online application today.
