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A Virginia auto dealer bond is a form of license and permit bond required in order to operate as a motor vehicle dealership anywhere in the state of Virginia. The purpose of these bonds is to ensure that dealers operate in accordance with applicable state laws and that neither the state nor consumers suffer any financial loss if they don’t.
Bond Penalty Amount: $50,000
Bond Term: 1 year
Bond Expiration Date:Varies
Who Needs Them?
Anyone seeking to obtain or renew a license as an auto dealer in Virginia must first obtain the appropriate surety bond. The bond requirements are the same, regardless of sales volume or whether the dealership sells new or used motor vehicles.
How Do They Work?
An applicant for a new motor vehicle dealer’s license must purchase a Virginia dealer bond as part of the licensing process. The bond must be continuous in order to maintain a valid dealership license.
The three parties to the bond agreement are the Virginia Motor Vehicle Board (the obligee that requires the bond), the dealer (the principal required to purchase the bond), and the surety (the company that underwrites and issues the bond).
The terms and conditions of the bond establish the grounds for filing a claim against the bond. A violation of those terms and conditions can result in a claim by anyone who has suffered a financial loss as a consequence of the dealer’s unlawful or unethical actions.
When a claim is filed, the surety will investigate to ensure that the claim is valid and will then pay it on behalf of the dealer. This payment is an advance that the dealer is legally obligated to repay to the surety.
What Do They Cost?
The required bond amount established by the Virginia Motor Vehicle Dealer Board is $50,000. The dealer pays a small percentage of that $50,000 as the annual premium. This premium is determined by the surety based largely on the dealer’s personal credit score. Other factors that enter into determining the premium rate for an applicant include the dealer’s personal and business financials and experience in the industry.
Applicants with good credit (650 and above) are assigned a standard market premium rate that falls between 1% and 5%. For individuals with lower credit ratings, we can still offer the most competitive premiums with financing sometimes being an option.
"Since 2001, I have jumped through hoops every 2-years come bond renewal time. With Absolute Surety and their user-friendly online application form, it was all done in MINUTES! Highly Recommended!!!"
Sean McCabe, Orlando