Overview of Delaware Auto Dealer Bond Requirements
The purpose of the auto dealer bond required of applicants for a Delaware dealer license is to guarantee their compliance with Chapter 30 of the Delaware Code.
The bond is an agreement between the dealer, the state and the surety which issues the bond. It sets out the conditions which the dealer must comply with and whose violation by the dealer may lead to a bond claim. If a claim is made against a bond, the surety may extend compensation to claimants as high as the full penal sum of the bond.
Private individuals in Delaware may sell up to 4 vehicles per calendar year before they are required to gain a license as a dealer. All dealers must be licensed through the Delawares Division of Revenue through the Division of Motor Vehicles. Prior to the issuance of the license the dealer must present the franchise agreement, as well as having the dealership facilities inspected by a division representative. There is no charge for this inspection.
This bond and license expire on December 31 and must be renewed yearly prior to their expiration.
For an in-depth explanation of how surety bonds work, see our ‘What is a surety bond’ guide!
See below to find out how much your bond may cost, how to get bonded with bad credit, what may give rise to a claim, and how to apply for your bond with us.
Call us anytime if you have any additional questions about bonding requirements in Delaware at (866)-450-3412!
Cost of Getting Your Bond
Upon applying for your bond, you will be offered a rate. This rate, or bond cost, is different from the bond amount which is $25,000 for the Delaware auto dealer bond. The bond amount is the maximum compensation that the surety may extend to claimants whereas the bond rate is a small percentage of that total amount, basically a premium.
How high or low that rate is depends on you, the applicant, and mostly on your personal credit score. Applicants with high credit scores (700 FICO or above) are typically offered low rates - between 1% and 3% of the total amount, i.e. as low as $250 in some cases.
The surety also considers your financial statements, assets, liquidity and other factors so even if your credit score is not ideal, you may still get a low rate, depending on the circumstances.
Want to know how much your bond will cost? Complete our surety bond application form, and we will provide you a free quote on your bond, with no additional obligations for you.
Getting Bonded With Bad Credit
Of course, not all applicants have perfect credit scores but that doesn’t mean they can’t get a bond! For those applicants, we have our Bad Credit Program.
Under this program, anyone with a lower or nonexistent credit score can get bonded just as easily as applicants with higher scores, though at a slightly higher rate. Sureties assume a greater risk when issuing bonds to applicants with lower rates which is why they require a greater rate initially.
Visit the program page to find out more about getting bonded with bad credit, and to request a quote!
Claims Against Your Dealer Bond
A claim against a dealer’s bond is typically filed if the dealer has violated some condition of the bond agreement. Bond conditions are typically based on the legal requirements for compliance set out in state laws, i.e. the Delaware code in this case.
Typically, violations of state laws on behalf of auto dealers may include fraud, dishonesty, misrepresentation, deliberate omissions and more. In such instances, persons harmed by a dealer’s actions may file a complaint with the Delaware Division of Motor Vehicles which in turn may file a claim against the dealer’s bond with the surety bond company.
If a surety pays any compensation to a claimant, the bonded dealer is required, as per surety bond agreement, to repay the surety in full! This is why dealers should always strive to avoid giving rise to bond claims by adhering to the best business practices and complying with all state laws and regulations.
If a cause for a complaint on behalf of consumers should still occur, dealers should contact their surety to consult them about possible ways to resolve the situation before a claim is filed. Sureties have plenty of expertise in helping resolve such situations and are a dealer’s best friend when complications arise.
Get Bonded in Delaware Today!
Complete our surety bond form to get started with the application process! We will provide you with a free quote on your bond and additional information how to finalize your application.
It takes about two working days for your bond to be issued. Once it is issued, we will provide you with a digital copy, and send the original to you via standard mail.
Call us at (866)-450-3412 for more information about surety bonds or if you need any help with your application!