Pennsylvania Auto Dealer Bond Overview
Obtaining a Pennsylvania auto dealer bond is one of the main prerequisites for getting your auto dealer license in the state. The purpose of the bond is to protect citizens from fraudulent dealership practices.
Just like other Pennsylvania surety bonds, the auto dealer bond is a contract between three parties. Your dealership is considered the principal that is asked to furnish the bond. The state authority that requires it is the obligee, and the bond provider is the surety that underwrites it.
- Surety Bond Name: Pennsylvania Manufacturer/Dealer/Full Agent/Card Agent/Messenger Service/Salvor Bond
- Surety Bond Amount:
- $20,000 bond for each location of a manufacturer or dealer;
- $50,000 for each location of a messenger service;
- $30,000 for each location of a full agent;
- $10,000 for each location of a salvor;
- $3,000 for a card agent
- Obligee: Pennsylvania Department of State’s Board of Vehicle Manufacturers, Dealers and Salespersons
- Required Expiration Date of Dealer Bond: N/A
- Surety Bond: Continuous
Although it’s a common misconception that surety bonds act like insurance, they are actually not a protection for your dealership. Their purpose is to protect the state and your customers from potential misuse or fraudulent activities that your business might engage in. If such a situation occurs, they can file a claim against your Pennsylvania auto dealer bond. If a claim is proven, you must cover any losses of the claimants up to the penal sum of the bond. The surety pays the costs at first, but then you are liable to reimburse them in full. Surety bond claims can cause serious financial harm to your business, so it is wise to avoid them as much as possible.
As explained, the Pennsylvania motor vehicle dealer acts as an extra line of credit for your dealership. Besides protecting the general public, it’s also a positive sign that your business is trustworthy.
Pennsylvania Auto Dealer Bond Cost
After having an overview on the purpose of Pennsylvania auto dealer bonds, it’s important to see how your surety bond cost is set.
Depending on the type of dealership you’re about to start, your bond amount will range from $10,000 to $50,000 in Pennsylvania. However, you will need to pay only a percentage of it, called the bond premium, in order to ensure your compliance.
- Applicants with good credit score, usually above 650, are likely to pay between 1% and 3% of the bond amount.
- Applicants with a bit lower credit score, between 600 and 649, can expect between 2.5% and 5% of the bond amount as a bond premium.
This means that even if you have to obtain a $50,000 Pennsylvania auto dealer bond, you might actually need to pay as little as $500.
You can consult the surety bond costs that you can expect to pay, in the different credit score ranges in the table below.
||Pennsylvania Auto Dealer Bond Cost Based On Credit Score|
|Surety Bond Name||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Pennsylvania auto dealer or manufacturer bond||$20,000||$150-$300||$200-$600||$500-$1,000||$1,000-$2,000|
|Pennsylvania messenger service bond||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$5,000|
|Pennsylvania full agent bond||$30,000||$250-$500||$300-$900||$750-$1,500||$1,500-$3,000|
|Pennsylvania salvor bond||$10,000||$100-$150||$100-$300||$250-$500||$500-$1,000|
After you submit a full Pennsylvania auto dealer bond application, your surety will be able to give you the exact percentage of your bond premium. The surety looks at your overall personal and business finances, and assesses your business’s strength and viability. The more solid it is, the lower your surety bond cost will be.
For a quick estimate of your Pennsylvania auto dealer bond cost, you can use our surety bond cost calculator. If you want to get your exact bond quote fast, the best approach is to call us directly at (866)-450-3412 or apply online.
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The usual indicators that sureties consider when reviewing your application are:
- Your credit score - highly important
- Personal and business financials
- The strength of your assets and liquidity
- Your professional experience in the auto dealership business
Carefully consider the surety bond agency that you choose to work with, because your choice can affect your surety bond cost as well. At Bryant Surety Bonds, we foster strong connections with numerous A-rated, T-listed surety companies. This allows us to offer our customers outstanding bonding rates, since we have access to our partners’ best bonding programmes.
Bad Credit Program
Getting your Pennsylvania auto dealer bond with bad credit can be a difficult endeavour. Since we know dealers with problematic finances have a tough time with this, we’ve created our Bad Credit Surety Bond Program to help them in the process.
If your credit score is low, or you have tax liens, past bankruptcies, or civil judgments, you can apply under this program and get exclusive bonding rates. The usual bonding premiums for applicants with a lower credit score are between 5% and 10%. While the costs are slightly higher, the bad credit program is a good option to get the bond you need and grow your business from there.
Pennsylvania Auto Dealer License and Renewal
Besides obtaining your Pennsylvania auto dealer bond, to get your Pennsylvania auto dealer license you’ll need to provide various other documents, and comply with the requirements of the Pennsylvania Department of State’s Board of Vehicle Manufacturers, Dealers and Salespersons.
The first step in your licensing application is to identify the type of license you will need. The options in Pennsylvania include dealer or manufacturer, messenger service, full agent and salvor license.
You need to provide the following documents together with your license application (Form 60-SPOA 2602B):
- Proof of ownership or lease of your dealership location
- Photos of your office space, sales area, business sign and business hours
- Proof of compliance with all zoning codes
- Certificate of Occupancy as issued by the Department of Labor and Industry
- Salesperson Initial License Application for each sales agent
- Formation documentation for sole proprietorship, corporation, limited liability company or a partnership
- State Police Background Check
- Proof of payment of the fees applicable for your case
- Pennsylvania motor vehicle dealer bond (MV-375 Form)
Once your application is received in full, the State Board will review it. If all documents match the requirements, you’ll be issued your Pennsylvania auto dealer license.
It expires on May 31st of each odd-numbered year, so it needs to be renewed every two years. To stay compliant, you also need to renew your Pennsylvania auto dealer bond. This means that your surety bond cost can decrease over the years, if you showcase improving financials.
Get the FREE Pennsylvania Dealer License Guide Ebook to learn more about how to get licensed and start your auto dealership!
Get Your Pennsylvania Auto Dealer Bond Today
Starting your bonding process is quite straightforward. To get a FREE surety bond quote, you can apply online and complete your application in a few easy steps. In case you have any hesitations or questions, you can always consult our bonding experts by calling (866)-450-3412. They’ll be happy to assist you with your bond application.