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Nebraska requires applicants for licensing as a motor vehicle dealer to purchase a surety bond. This bond is known as a motor vehicle dealer bond, which is a form of “license and permit” bond. Such bonds guarantee that dealers abide by all applicable state rules and regulations.
Bond Penalty Amount: $50,000
Bond Term: 1 year
Bond Expiration Date: Varies
In Nebraska, all auto dealer bonds expire on December 31. There must be a valid bond in place in order for a dealer’s license to be renewed.
Who Needs Them?
Nebraska’s Motor Vehicle Industry Licensing Board doesn’t distinguish between new, used, franchise, or wholesale dealers when it comes to bonding. Every type of motor vehicle dealer must purchase an auto dealer bond in the amount of $50,000.
How Do They Work?
Every surety bond is a contract binding together three parties. Nebraska dealer bonds are no exception. These three parties are:
The obligee. The Nebraska Motor Vehicle Industry Licensing Board.
The principal. The owner of the dealership.
The surety. The firm that underwrites and issues the bond.
The rights and responsibilities of these three parties are spelled out in the terms and conditions of the bond. If the dealer violates any of the terms and conditions of the bond, a consumer who suffers a financial loss as a result of that violation can file a claim against the dealer’s bond.
The surety company will determine the validity of the claim and will then step up and pay it. Unlike the case with insurance, this doesn’t relieve the dealer of financial responsibility. The surety’s payment to the claimant is actually an advance that the dealer must repay in full.
What Do They Cost?
The premium cost for a Nebraska auto dealer bond is a small percentage of the $50,000 required bond amount. The exact percentage is determined on a case-by-case basis, taking into consideration the dealer’s credit score and personal and business financials.
You can expect to pay anywhere between .5% to 5% of the bond penalty amount if you maintain good credit. Applicants with excellent credit typically pay the standard market premium rate, while those with worse credit can expect to pay a bit more.