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A New York Motor Vehicle Dealer bond is one of the requirements for becoming licensed to sell new or used motor vehicles in the state of New York. It serves as a license and permit bond guaranteeing that the dealer will do business in compliance with all New York DMV rules and regulations. The bond protects the public against financial loss resulting from any unlawful or unethical action of a dealer licensed in the state of New York.
All auto dealers operating in the state must have a continuous New York auto dealer bond in place to maintain their license. includes used car dealerships as well as franchised auto dealers.
NOTE: Dealers who only sell trailers, motorcycles, boats, snowmobiles, vehicles over 10,000 lbs, and ATVs are not required to provide a surety bond. The current Bill (S5485B) states that if you are a currently licensed dealer, when you renew or alter your bond, you will be required to increase the penalty to $100,000.
The parties to the bond agreement are the New York Department of Motor Vehicles (the obligee requiring the bond), the motor vehicle dealer (the principal purchasing the bond), and the company issuing the bond and backing it financially (the surety).
If the dealer commits an infraction of the bond’s terms and conditions, a party who experiences a financial loss as a result may file a claim against the bond. The surety will determine whether the claim is valid before paying it. The bond contract includes an indemnification clause that requires the dealer to reimburse the surety for the amount paid to the claimant. In essence, the surety only advances the claim amount to expedite the payment process and must be repaid.
The required bond amount for a given used car dealer depends on how many vehicles the dealer sold in the previous year. These amounts are as follows:
The dealer will pay a small percentage of that amount as the annual premium for the bond. The factors that determine the premium include the dealer’s credit score and financial situation as well as their industry experience and reputation. Dealers with good credit typically pay from 1% to 3% of the required bond amount. Those with poor credit will likely pay a higher premium.
After you receive your surety bond and power of attorney in the mail, you will need to sign it and submit it to the State of New York, Department of Motor Vehicles:
NYS DMV Bureau of Consumer & Facility Services
P.O. Box 2700
Albany, NY 12220-0700
Our experienced surety bond professionals will gladly answer any questions you may have about New York Motor Vehicle Dealer bonds and help you get the bond you need.