Tennessee Auto Dealer Bond Overview
When applying for your Tennessee auto dealer license, you’ll be required to post an auto dealer bond. So how precisely does the bond function?
Your Tennessee motor vehicle dealer bond is a third-party agreement between your dealership (the principal), the State of Tennessee (the obligee) and the surety that underwrites the bond.
The bond acts like a surety credit for your business, as it guarantees you will comply with the applicable state regulations in your dealership operation. In this sense, it is a safety net for your customers that you will follow the law.
Here are some important details about the auto dealer bonds required in Tennessee:
Motor Vehicle Dealer Bond
- Obligee: Tennessee Motor Vehicle Commission
- Required Expiration Date of Dealer Bond: The bond must expire on the last day of the month and is required to run for a two-year term
- Surety Bond: The bond is not continuous, so it needs a Continuation Certificate
- Bond Form Revision Date: 11/2003
Motor Vehicle Auction Bond
- Obligee: Tennessee Motor Vehicle Commission
- Required Expiration Date of Dealer Bond: June 30th
- Surety Bond: The bond is not continuous, it needs a Continuation Certificate
- Bond Form Revision Date:12/2003
What happens when you fail to comply with state regulations? You might get a claim on your bond, which is a serious threat to your business. If the claim is proven, the damages will be initially covered by the surety up to the penal sum of the surety bond. Afterwards, as stated in the indemnity agreement that accompanies the bond, you will need to reimburse all costs. That’s why it’s a good business practice to avoid claims.
Tennessee Auto Dealer Bond Cost
For obtaining a motor vehicle auction or a motor vehicle dealer license, you’ll have to post a $50,000 surety bond.
While the bonding amount seems high, you’ll need to pay only a percentage of it. If you qualify for the standard bonding market, this means your bond premium will be between 1%-3%, or between $500 and $1,500.
The precise bond cost you will have to pay depends on a variety of factors. We evaluate your business on the basis of a few stats that include your credit score, professional experience and overall financials. This means that if you work on improving your credit and showcase your business’s liquidity, you will get a lower price.
Let’s not forget the importance of choosing the right surety, to get the best bond cost. Bryant Surety Bonds is able to offer you exclusive bonding rates, which means direct savings for you. We have excellent relationships with a number of A-rated, T-listed surety companies, which allows us to shop around for the lowest rate for your specific case.
You can get a ballpark estimate by using the surety bond cost calculator in the right sidebar. Plus, you can check out how your premium is calculated on our surety bond cost page.
Bad Credit Program
If you have a low credit score, or other issues such as tax liens, civil cases or bankruptcies, you might find it difficult to get your Tennessee motor vehicle dealer bond. But there are still good options.
To help dealers with problematic credit, Bryant Surety Bonds offers our bad credit surety bond program. In order to mitigate the risk, the bond premiums are slightly higher, in the range of 4%-7%. However, it’s still a great chance to get bonded with no hassle and to be able to stay in business.
We offer personalized approach to our high-risk applicants, so that we can offer them the best rates and help them improve their finances over time.
Tennessee Auto Dealer Bond Renewal
The Tennessee dealer license requires a renewal every two years. The Tennessee motor vehicle dealer bond needs to match the period of validity of the license, and must expire on the last day of the month in which it was issued.
It’s likely that the next time you apply for a bond, you might get a different bond premium. The reason is that the cost is based on the current overall status of your business. This is a great opportunity to reduce your bonding costs over the years, if you work on improving your credit score and other factors.
It’s important to keep track of your renewal deadlines and to start your renewal in due time, so that you don’t end up with an expired license. Getting bonded with Bryant Surety Bonds brings the bonus of renewal deadline reminders from us, which means no worries for you.
Get Your Tennessee Auto Dealer Bond Today
Starting your bonding process is really easy. You can get a free, no-obligations quote by applying online or calling (866)-450-3412. Our bond experts are more than happy to help you out in case you have any questions or need assistance with your application.
In order to find the lowest bonding rate for your business, you’ll need to also provide us with a few business and financial documents, so that we can get a good overview. Don’t forget to make a copy of the completed bond and save it for your records, since the original needs to go with your license application.