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Auto Dealer Bond Hawaii

Hawaii Auto Dealer Bond Explained

In 2018, over 56,000 new vehicles were registered in Hawaii according to Hawaii Auto Outlook. Despite the small footprint of the Hawaiian Islands, there are plenty of opportunities for auto dealers to make sales. For anyone hoping to break into the industry, you must have a license, and one of the key requirements is obtaining a bond.

The Hawaii auto dealer surety bond is a License Surety Bond that serves to protect Hawaii's citizens by providing a path for recourse in situations where an Auto Dealer does not adhere to the laws, rules, and regulations as set in Hawaii state legal statutes. A Hawaii motor vehicle dealer bond may be required as part of the Motor Vehicle Dealer licensing and/or vehicle registration process.

In Hawaii, the required Motor Vehicle Dealer bond amounts are as follows:

• Hawaii, New Motor Vehicle Dealer bond requirement (Less than 10 sold per month) - $50,000 Surety Bond
• Hawaii, New Motor Vehicle Dealer bond requirement (10 or more sold per month) - $200,000 Surety Bond
• Hawaii, Used Motor Vehicle Dealer bond requirement (Less than 60 sold per month) - $25,000 Surety Bond
• Hawaii, Used Motor Vehicle Dealer bond requirement (60 or more sold per month) - $100,000 Surety Bond
• Hawaii, Motorcycle/Scooter Dealer bond requirement - $10,000 Surety Bond

You should always check with the Hawaii Department of Commerce and Consumer Affairs, or requesting agency, for the most current required Hawaii motor vehicle dealer bond amount as well as the required bond forms.

What Parties Are Involved in a Hawaii Motor Vehicle Dealer Bond?

A Hawaii motor vehicle surety bond involves three parties who each have equal obligation. The principal is the party who actually obtains the bond, usually the motor vehicle dealer. Principals are responsible for paying bond premiums, renewing bonds on schedule, and taking final financial responsibility for any claims paid. The obligee is the party who creates the bond mandate and receives any funds from claims filed against the bond. In this case, Hawaii is the obligee. A surety is the party that issues the bond and guarantees payment of any valid claims. After paying, however, the surety collects whatever sum it paid from the principal.

Who Needs an Auto Dealer Bond in Hawaii?

It is illegal to sell more than two vehicles in a 12-month period without a license. Having a Hawaii auto dealer surety bond is a condition for being granted a license, meaning that basically anyone who plans to sell vehicles as a business will need to have a bond. What kind of bond you need depends on the number and type of vehicles you intend to sell (look above for reference).

How Are Auto Dealer Bonds Obtained in Hawaii?

Fortunately, the process is quite simple. To obtain a bond, first you need to submit an application to a company like Viking Bond Service. Make sure that any surety company you work with issues bonds that comply with all regulations in Hawaii. In order to apply, you will need to supply information about your personal finances and your business plans. Any partners you have must submit the same information. Underwriters at the surety calculate your premium based on your credit risk, then offer you a quote. If you accept the price and pay the premium, the only step left is to submit a formal document to Hawaii officials showing you have an active bond.

The Cost of a Hawaii Auto Dealer Bond

The cost of a Hawaii auto dealer surety bond is only a small percentage of the bond value, usually around 1-5%. Therefore, a $50,000 bond might only cost $500. The exact amount you pay is based on your credit risk. As the principal, auto dealers must also pay for any claims filed against the bond, but avoiding this substantial cost is as easy as following all rules affecting auto sales.

How to Renew a Hawaii Auto Dealer Bond

A Hawaii motor vehicle bond is active for 12 months. Once that period is over, bonds must be renewed, otherwise they lapse, along with the motor vehicle dealer license required to sell vehicles legally. Renewing a bond is much like applying for one in the first place. You supply financial information, underwriters evaluate your risk, then they quote you a price. If your credit score has gone up or down over the previous year, expect your premium to do the same.

How Viking Bond Service Can Help You Get a Hawaii Auto Dealer Bond

writes Hawaii motor vehicle dealer bonds. We can assist both clients with good credit and clients with bad credit. Typically, the worse the credit, the higher the surety bond premium will be. In either case, we always work to get the best quote for you. Viking Bond Service has partnered with markets that welcome Hawaii motor vehicle bond applications and provide competitive quotes for them.

Request a Motor Vehicle Dealer Bond Quote:

You don't have a business until you have a bond, so don't wait to get started. Call us at 1-888-278-7389, or send us your questions through the contact form on this page. If you're ready to move forward now and want to get a quote in just 1-2 days, complete our easy online application at your convenience.