Michigan Auto Dealer Bond Overview
Similarly to other states, if you sell or lease more than five motor vehicles per year in Michigan, you need to obtain a Michigan auto dealer license. A part of the licensing process for Class A, B, and D licenses is getting a Michigan auto dealer bond.
Motor vehicle dealer bonds are required by licensing authorities across the country, in order to ensure that dealerships will stick to state rules that govern car sales. They serve as a protection for the state itself, and for the dealership’s clients. Being bonded is a sign of trustability for your business.
All surety bonds function like a three-party contract. There is a principal who needs bonding, which is your dealership, an obligee that requires the bond, and a surety that provides it.
- Surety Bond Name: Michigan Uniform Vehicle Dealer Surety Bond
- Surety Bond Amount: $10,000 Michigan motor vehicle dealer bond
- Obligee: Michigan Department of State
- Required Expiration Date of Dealer Bond: N/A
- Surety Bond: Continuous
While insurance serves to protect your business, your Michigan auto dealer bond works in the interest of the state and your clients. If your dealership does not abide by the state laws and commits fraud or misuse, you can face a claim on the bond.
Proven claims are no joke. They can ruin your business financially, and in terms of reputation. Affected parties can be reimbursed up to the bond amount, which is done by the surety at first. However, your dealership is liable to repay the surety in full.
Michigan Auto Dealer Bond Cost
Michigan auto dealers who deal with more than five vehicles per year need to get licensed. Additionally, those dealers who want to obtain a Class A, B or D license have to post a $10,000 Michigan car dealer bond.
The actual price of your surety bond, however, is formed as a percentage of this bond amount. It is called the bond premium.
- If you have a credit score above 650, you are likely to pay between 1% and 3% of the bond amount.
- For applicants with credit scores between 600 and 649, the premium is between 2.5% and 5%.
- On the standard bonding market, you might have to pay only $100 for your Michigan uniform vehicle dealer surety bond.
You can consult the surety bond costs that you can expect to pay in the different credit score ranges in the table below.
|Auto Dealer Bond Cost Based on Credit Score|
|Surety Bond Name||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Michigan Uniform Vehicle Dealer Surety Bond||$10,000||$100-$150||$100-$300||$250-$500||$500-$1,000|
Your precise surety bond price is available only after submitting a full application. Your surety has to take a close look at your personal and business finances to determine your surety bond cost. That’s how it can assess the risk of getting you bonded. The better your stats are, the lower your Michigan auto dealer bond cost will be.
The usual indicators that are considered are:
- Personal credit score
- Strength of assets and liquidity
- Business knowhow
- Dealership’s finances
Choosing the right surety agency can also affect your bond price. Getting bonded with Bryant Surety Bonds means you get the best rates, with secure bonding by a number of A-rated, T-listed surety companies. We can shop around for you to find the matching bonding program for your case.
Our surety bond cost calculator in the right sidebar is always available for a quick consultation. You can get an exact Michigan car dealer bond quote by applying online today or contacting our surety bond experts at (866)-450-3412.
Bad Credit Program
Here at Bryant Surety Bonds, we’ve bonded tens of thousands of auto dealers across the country. That’s why we understand that obtaining the Michigan auto dealer bond that you need can be unpleasant if you have bad credit. Our Bad Credit Surety Bond Program is here to solve this problem.
If you apply for a bond with low credit scores, tax liens, bankruptcies, or civil judgments, you can expect a bond premium between 5% and 10% of the required bond amount. This mitigates the increased risk of bad credit bonding.
While the price will be slightly higher, the program allows a wide range of Michigan auto dealers to stay compliant and stay in business.
Michigan Auto Dealer License and Renewal
Your Michigan car dealer licensing process starts with submitting your Original Vehicle Dealer License Application with the Michigan Department of State. The full list of requirements is available in Chapter 1: Licensing of Vehicle Dealers.
Along with your completed application, you need to submit the following documents:
- Sales tax number
- Approval for applicable zoning and municipal requirements
- Business name, location and telephone
- Dealer plates and flees insurance
- License/plate fees payment
- $10,000 Michigan uniform vehicle dealer surety bond
All Michigan dealer licenses expire on December 31st. Renewal is required on time in order to stay in operation. Your Michigan auto dealer bond also needs to be renewed to ensure your compliance.
Don’t forget that your surety bond cost can change with every renewal. Make sure to work on improving your financial stats, so you can get a lower price on your Michigan auto dealer bond over time.
Get Your Michigan Auto Dealer Bond Today
To start your bonding process, apply online or call us at (866)-450-3412 to get your free, no-obligations Michigan auto dealer bond quote. Our bonding experts are available for your questions and considerations.