Auto Dealer Bond
In most states, an auto dealer bond is required when seeking licensure to operate an auto dealership or other type of motorized vehicle dealership. Typically, this bond is required as part of the auto dealer vehicle registration process. Let's take a closer look at auto dealer bonds and how they can help you run a successful motor vehicle dealer business.
What is an Auto Dealer Surety Bond?
The auto dealer bond is a license surety bond that serves to protect the public by providing a path for recourse in situations where an auto dealer does not adhere to the laws, rules, and regulations of the state or governing body requiring the bond. Auto dealer bonds may also be referred to as a motor vehicle dealer bond.
To understand how these types of surety bond work, let's look at the three parties involved:
- The obligee is the entity, agency or individual that requires the bond. It is usually the state in which you plan to have your dealership, requiring it in the interests of their citizens.
- The principal is the one who needs surety bond coverage. This is you, the auto dealer, in this case.
- The surety serves as the underwriter of the auto dealer bond. Viking Bond Service, Inc. is your surety of choice, no matter what state you're in.
These three parties work together to ensure that motor vehicle dealerships operate in a way that provides peace-of-mind to the public.
Depending on the type of dealership you plan to run, you may need to file one of several bond types, including:
- RV bonds
- Used car dealer bonds
- Wholesale dealer bonds
- Motorcycle dealer bonds
- DMV bonds
All these bonds generally operate in the same basic way. If a dealer commits fraud or conducts unethical business practices, the wronged party (which can include a customer, the bank, or the government agency that provided the license) can make a claim and receive compensation from the surety company.
Car dealership bond amounts vary depending on the state where the bond is required, the classification of the motor vehicle dealer license being acquired, and the number of units sold previously or projected to be sold. If you require this surety bond to operate your business, you typically have to maintain it for as long as the license is to remain enforced. These bonds are annually renewable.
Why are Auto Dealer Bonds Required?
A motor vehicle dealer bond is designed to protect the state and potential customers from dealerships that commit fraud. Sureties scrutinize the principal being bonded to assess the potential risk of bonding the individual or company. This gives potential customers peace of mind while adding credibility to your dealership in the eyes of the state agency.
How Much Do Auto Dealer Surety Bonds Cost?
Since there are many factors that go into determining the premium price on an auto dealer bond, there is no fixed amount that a surety charges. Different states have different bond requirements and variables like your credit, bonding history and business type can affect the premium. The surety assesses the likelihood of a claim being made and charges a percentage of the bond amount accordingly. The typical price quoted for these bonds nationally is anywhere from 1% to 5% of the required bond amount. Quotes can and do come in both lower and higher than that range though. Credit standing has an effect on the pricing of the bond so usually, the better the credit, the better the quote will be.
Viking Bond Service, Inc is committed to providing surety opportunities to businesses of all types. For those with mixed credit backgrounds, we offer a poor credit surety bond program and we work to offer the lowest premiums possible with all of our clients. No matter what your surety bond needs are, our auto dealer surety bond experts are happy to help you every step of the way.
Whether you're new to getting licensed or an experienced auto dealer, Viking Bond Service, Inc. is your superior surety solution. As a surety bond industry leader, we can handle any sized project in a way that other auto dealer bond surety providers can't match. Reach out to one of our experts to see the difference for yourself!
Why Choose Viking Bond Service
Viking Bond Service writes auto dealer surety bonds nationwide. We provide competitive quotes for both good credit and bad credit clients. Thanks to a streamlined processing system and a knowledgeable technical staff, turnarounds are quick, giving us more time to focus on helping and informing our clients and agents. For instance, a quote will typically take under 24 hours to obtain after receiving the surety bond application.
Viking Bond Service works with many markets, and we approve nearly all requests sent to us. Those who wouldn't traditionally qualify for a bond due to financial deficiencies or bad credit can apply to special programs to receive surety bonds. If you have questions or would like to apply for a motor vehicle surety bond today, please apply online or contact us through our form or by calling us at 1-888-278-7389.
(See Also: Cost Expectations for Auto Dealer Bonds)
Request a Motor Vehicle Dealer Bond Quote:
- Call us at 1-888-278-7389.
- OR
- Complete an Online Application.
- OR
- Complete the contact form on the page. One of our agents will contact you shortly.
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Frequently Asked Questions About Motor Vehicle Dealer Bonds
According to data from 2016, there are 16,708 franchised dealers selling new vehicles in America and over 139,000 businesses selling used cars. In the vast majority of cases, each of these dealers has an auto dealer bond. This quick FAQ covers everything you need to know about this important type of bond.
How Long Does it Take to Obtain an Auto Dealer Bond?
Do I Need Collateral For an Auto Dealer Bond?
When and How Do I Renew My Auto Dealer Bond?
Can I Get a Lower Rate on an Auto Dealer Bond With Poor Credit?
How Are Claims Handled for Auto Dealer Bonds?
How Can I Save Money on an Auto Dealer Bond?
Credit challenges are not always a barrier to obtaining a Surety Bond. Often times, Viking can quote your request despite a poor credit rating.
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