An auto dealer surety bond is an agreement between three parties: the obligee (the state requiring the bond), the principal (the auto dealer) and the surety (the provider of the bond).
The motor vehicle dealer bond guarantees that your dealership will operate in compliance with state regulations. That’s why it’s usually required in the process of obtaining your dealer license: it is a protection the state requires of you for your customers.
When a surety reviews your application for bonding, your dealership must undergo a pre-qualification process that assesses the strength of your business. The bond, in this sense, acts as a line of credit for your business that indicates you are operating a reliable auto dealership.
A claim can be made on the dealer bond, if your dealership doesn’t follow the applicable laws and regulations. If a legitimate claim is filed against your dealership, the surety will pay all relevant costs up to the amount of the surety bond it had underwritten for you. However, you will have to reimburse these costs later on, which means avoiding claims is the best course of action.
Each state has a different requirement in terms of the bond amount, so the cost for your business depends on your dealership’s location. Depending on the state, the required motor vehicle dealer bonds can vary widely, from as little as $5,000, up to $100,000.
The cost of getting bonded -- the premium -- is only a percentage of the bond amount, usually between 1%-4% for standard market applicants, 5-14% for less qualified. Your premium depends on the specifics of your business, such as your credit score, professional experience, and the overall financial strength of your business. The better these factors are, the smaller the cost will be.
The most effective ways include:
Bryant Surety Bonds works only with A-rated, T-listed surety companies, which gives us access to exclusive bonding rates. Additionally, we’ll help you gather all needed documents that will improve your application and lower your costs.
Even if you have less-than-perfect credit, or even bankruptcies, tax liens or civil judgments, Bryant Surety Bonds can help you get bonded. We operate a bad credit surety bond program, which helps high-risk applicants get the bonds they need.
The bond premiums are slightly higher, typically between 5%-14%, in order to compensate for the risk level. We’ll consider your specific situation and will give you the best bonding option, so that you can stay in business and improve your finances.
Getting your DMV bond, as it’s often called, is a straightforward process. You can apply online and get a quote in minutes, or call (866)-450-3412 and one of our auto dealer bond experts will guide you through the application process.
To get your exact bond price, you will have to supply a few required personal and financial documents. We’ll review your application, and assess the overall status of your business and the bond premium. And your bond is ready!
Usually each state requires a specific bond form, so you need to make sure you submit that with your application. Remember to sign the completed bond and keep a copy for future reference. You will have to renew your bond yearly or bi-yearly, depending on the state in which you operate.
Each state has different renewal deadlines for their dealer bonds. To stay up-to-date, check out the dates for your particular state below.
Do you have questions about your surety bond?
Call us at (866)-450-3412! Our surety bond experts are here to help you.