Auto Dealer Bond Delaware
Delaware Auto Dealer Bond Explained
Did you know the average age of vehicles in Delaware is 10.8 years compared to the national average of 11.6 years? That means Delaware drivers replace their vehicles more often than drivers elsewhere, making the state an excellent place to take up auto sales. Before you can start selling legally, you will need to obtain the right kind of surety bond.
The Delaware motor vehicle bond serves to protect Delaware'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 Delaware state legal statutes. A Delaware Motor Vehicle Dealer bond is not always required but can be required as part of the Motor Vehicle Dealer licensing and/or vehicle dealer registration process.
In Delaware, the required Motor Vehicle Dealer bond amount is as follows:
- Delaware Motor Vehicle Dealer bond requirement - $25,000 Surety Bond
You should always check with the Delaware Division of Revenue, or requesting agency, for the most current required bond amount as well as the required bond forms.
What Parties are Involved in a Delaware Auto Dealer Bond
Every Delaware auto dealer surety bond agreement includes three parties. You are the principal, meaning you're responsible for obtaining the bond, renewing it annually, and paying any claims made against the bond. Delaware is the obligee because it creates the bond requirement and receives compensation from claims, which it then distributes to injured parties. The surety issues the bond and initially pays any claims, but afterwards they collect the amount of the claim from the principal.
Who Needs an Auto Dealer Bond in Delaware?
Anyone who intends to sell 5 or more vehicles within a 12-month period is required to have a Delaware motor vehicle dealer license, so they must also have a Delaware auto dealer surety bond. It does not matter if the vehicles are new or used — anyone who sells more than 4 vehicles without a bond or license is in violation of the law and subject to strict penalties.
How are Auto Dealer Bonds Obtained in Delaware?
The first step is to find a company like Viking Bond Service that can issue a Delaware auto dealer bond that fully complies with Delaware state laws. After finding the right company, applicants will need to supply information about themselves and their business, along with the same info for any equity partners. Underwriters then evaluate the applicant's credit risk and use that to calculate the premium price. The bond is active once the premium is paid.
The Cost to Obtain a Delaware Auto Dealer Surety Bond
Though the bond pays up to $25,000, the cost is typically only around 2-5% of that, paid annually. The exact amount depends on the applicant's credit risk, with higher risk translates to higher premiums. The principal (the bonded party) is also financially responsible for any claims the surety pays to satisfy the obligee. Claims cost more than premiums, creating a powerful financial incentive for auto dealers to follow the law to the letter.
How to Renew a Delaware Auto Dealer Bond
A Delaware motor vehicle surety bond is active for 12 months, after which it must be renewed. As part of the renewal process, principals have to resubmit their financial information to underwriters and have their credit evaluated again. Improved credit scores can lead to lower premiums and vice versa. In either case, it's important to have funds saved for renewal, otherwise the bond will lapse along with the motor vehicle dealer license.
How Viking Bond Service Can Help You Get a Delaware Auto Dealer Bond
writes Delaware auto dealer surety 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 Motor Vehicle Dealer bond applications from all states, and provide competitive quotes for them.
Request a Motor Vehicle Dealer Bond Quote:
The best time to get a bond is as soon as you know you need one. Call Viking Bond Service at 1-888-278-7389 to speak directly with one of our auto bond experts, or fill out our online application if you're eager to get a quote ASAP. For all other inquiries, please fill out the contact form included on this page.
Many variables go into figuring Performance Bond premiums. Read about what variables are considered and why premiums can vary so widely.
Quotes are available for clients with low credit. In many cases, a bond is not out of reach simply due to bad credit.
Getting a Surety Bond is not difficult. Viking can guide you from start to finish. Learn what is involved in the bonding process.
Cyber liability coverage may be a necessary tool for modern times. Viking can get you covered.
