New Jersey Auto Dealer Bond
What is a New Jersey Auto Dealer Bond?
The New Jersey Motor Vehicle Dealer Bond is a License Surety Bond that serves to protect New Jersey'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 New Jersey state legal statutes. A New Jersey Motor Vehicle Dealer Bond may be required as part of the Motor Vehicle Dealer licensing and/or vehicle dealer registration process.
In New Jersey, the required Motor Vehicle Dealer bond amount is as follows:
- New Jersey, New/Used Car Dealership bond requirement – $10,000 Surety Bond
You should always check with the New Jersey Motor Vehicle Commission, or requesting agency, for the most current required New Jersey Motor Vehicle Dealer Bond amount as well as the required bond forms.
How does a New Jersey Auto Dealer Bond work?
All auto dealers in New Jersey must follow codes of ethics and conduct. If someone purchases a vehicle and has reason to believe the dealer broke these codes - by selling a vehicle with the odometer rolled back, for example - that person may file a claim against the New Jersey Auto Dealer Surety Bond. As long as the claim is true, the bond company guarantees it will be paid, after which the auto dealer must pay the surety back. New Jersey requires all motor vehicle dealers to have a bond as a way to hold them financially responsible and, in the process, build trust in the local auto market.
Who should get a New Jersey Auto Dealer Bond?
If you intend to sell four or more new or used vehicles in New Jersey within a 12-month period, you must have a state license, which requires you to have a bond as well. If you intend to open a business based around selling vehicles, plan to get a bond.
Who are the parties involved in a New Jersey Auto Dealer Bond?
The auto dealer is only one of three parties in the agreement:
- Principal - The motor vehicle dealer that obtains the bond and agrees to pay for any claims filed against the bond.
- Obligee - The party that files claims against the bond seeking financial compensation to pay for damages caused by the principal.
- Surety - The company that issues the bond to the principal and guarantees payment to the obligee. In the event that the surety steps in to pay because the principal cannot, the principal must pay the surety back. It's important to remember this: the principal always has the final financial responsibility.
How much does a New Jersey Auto Dealer Bond cost?
More commonly known as the premium, the cost of an NJ auto dealer bond is a small percentage of the bond's $10,000 total value. Underwriters at the surety decide how much an individual bond applicant pays based on his or her credit score and financial history. The typical price range for these bonds in New Jersey is 1% - 5% of the bond amount.
Can you get a New Jersey Auto Dealer Bond with bad credit?
Applicants with bad credit will likely pay more, but they won't necessarily be denied, and their costs don't have to be exorbitant either. The best way to explore what a New Jersey Motor Vehicle Dealer Bond will cost you is to request a quote from a leading nationwide surety brokerage like Viking Bond Service.
How do I renew my New Jersey Auto Dealer Bond?
To renew, you will need to submit much of the same information you did when applying for the bond initially. Every time you renew, underwriters at the surety will re-evaluate your credit and re-calculate your premium price based on how your credit may have changed. As a result, premium prices could go up or down every time you renew. Keep this in mind as you prepare your yearly budget and work to keep costs in check.
How are claims handled for New Jersey Auto Dealer Bonds?
Having exhausted all other means, an individual may file a claim against the bond seeking compensation equal to the amount of the damages claimed. The surety will then launch a thorough investigation to prove whether the claim has merits. If so, the surety guarantees payment up to the $10,000 bond limit. However much the surety pays out must then be paid back by the principal, with interest and fees added - creating a powerful financial incentive to avoid claims against the bond.
How to apply for a New Jersey Auto Dealer Bond?
To apply, you will simply need to submit a standard bond application, which asks for details about your background, business, and finances, along with the same information from any partners you have. Underwriters may request additional documentation as necessary. When you apply with Viking Bond Service, you can submit your application at any time and expect to get a quote back within just 24hours!
Viking Bond Service - Working Throughout New Jersey
Do what many other car dealers in New Jersey have already done - secure a bond from Viking Bond Service. Start the process by completing our online application. You are also welcome to get more information first by filling out the form on this page or by calling us at 888-278-7389.
Viking's contract surety bond agents are registered with the SBA and can provide access to the Surety Bond Guarantee program.
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