Washington Auto Dealer Bond Overview
As in most states, getting a Washington auto dealer bond is one of the main requirements when applying for your Washington auto dealer license.
Auto dealer bonds work like all other types of Washington state surety bonds. They are a contractual agreement between three parties. Your auto dealership is the principal, the Washington State Department of Licensing is the obligee, and the surety is the entity underwriting the bond.
- Surety Bond Name: Vehicle/Vessel Dealer, Vehicle Manufacturer, Registered Tow Truck Operator, or Wrecker Business Bond
- Surety Bond Amount:
- $30,000 bond for motor vehicle dealer or wholesaler and for manufactured home or travel trailer dealer
- $5,000 bond for miscellaneous vehicle dealer (motorcycles and any miscellaneous vehicle other than motor vehicles, mobile homes, tent trailers, fifth wheel trailers, and travel trailers)
- Obligee: Washington State Department of Licensing
- Required Expiration Date of Dealer Bond: N/A
- Surety Bond: Continuous
Before you get your Washington auto dealer bond, you should understand the differences between surety bonds and insurance. Unlike insurance, bonds don’t protect your business, but rather safeguard the interests of your clients. In case you fail to follow the applicable Washington laws and regulations, an affected party can make a claim on your bond. If this claim is proven, you are liable to cover any losses up to the penal sum of your Washington auto dealer bond (either $5,000 or $30,000). Initially the surety pays all costs, but then you need to fully reimburse them. This means that claims should always be avoided, as they are a serious threat to your business’s finances and reputation.
Besides acting like an extra line of credit for your auto dealership, Washington auto dealer bonds are also a powerful sign for your clients that you are safe to do business with, and are a trustworthy partner.
Washington Auto Dealer Bond Cost
One of the most common questions about Washington auto dealer bonds, is what they will cost you. Let’s look at the way the surety bond cost is formulated.
For most Washington auto dealer bonds, the required bond amount is $30,000. It looks like a large sum, but in reality, the bond premium is only a small percentage of the bonding amount. This is actually what you have to pay.
- With a credit score above 650, your bond premium is likely to be between 1% and 3% of the bond amount.
- If your credit score is between 600 and 649, you can expect your cost to be between 2% and 4% of the bond amount.
For a $30,000 Washington auto dealer bond, you might need to pay a premium of only $300.
You can consult the table below, to see the surety bond costs that you can expect to pay within different credit score ranges.
||Auto Dealer Bond Cost Based On Credit Score|
|Surety Bond Name||Surety Bond Amount||Above 700||
Motor Vehicle Dealer Bond /
Wholesaler Dealer Bond /
Manufactured Home Dealer Bond /
Travel Trailer Dealer Bond
|Miscellaneous Vehicle Dealer Bond||$5,000||$100||$100-$150||$100-$200||$150-$350|
The exact percentage that you have to pay for your Washington auto dealer bond can be assessed only after you submit a complete bond application. Your surety will examine your overall finances and business stats, as well as your personal credit score. Your surety bond cost depends on the level of risk that your dealership appears to pose to the surety. The lower the risk, the less you will pay.
The most important indications that your surety takes into consideration when examining your business include:
- Your personal credit score is of high importance
- Your overall business financials
- Experience in the auto dealership field
- Strength of assets and liquidity
Getting the lowest surety bond cost also means choosing the right surety bond agency. Since we work with numerous A-rated, T-listed surety companies, here at Bryant Surety Bonds we can shop around various bonding options. That’s why we are able to offer you top notch bonding rates tailored to your specific circumstances.
Our surety bond cost calculator in the right sidebar of the page can help you get an idea of your Washington auto dealer bond cost. Your exact quote is one step away - just call us at (866)-450-3412 or apply online.
Bad Credit Program
Here at Bryant Surety Bonds we know, from years of bonding auto dealers across the country, that getting bonded with bad credit or other financial issues can be tough. We’d like to help out auto dealers with problematic finances, and so we designed our Bad Credit Surety Bond Program.
Applicants with low credit scores, past bankruptcies, civil judgments, or tax liens are welcome to apply for this program. The bonding premiums are usually in the range of 4% and 7%, a cost increase needed to mitigate the higher risk involved in bad credit bonding. In any case, the program is a great opportunity for dealerships to stay in business and improve their finances over time.
Washington Auto Dealer License and Renewal
Obtaining your Washington auto dealer license entails going through a number of legal steps, including getting a Washington auto dealer bond. To give you a kickstart in the licensing process, here is an overview of the requirements that you need to meet to start your dealership in the state.
The licensing authority is the Washington State Department of Licensing. The full list of documents and steps are available in the Motor Vehicle and Other Dealer License Requirements document
Together with your Washington business license application, you need to furnish the following:
- Vehicle Dealer/Manufacturer Addendum
- Vehicle Dealer E-Permit Online Access Application
- Financial/Source of Funds Statement for sole proprietors, partners, or business entities
- A separate Personal Criminal History Statement for each member of the business
- Fingerprint card for each member of the business
- Certificate of Dealer Education in case you sell only used vehicles
- Meet the Established place of business requirements (available in the Dealer Checklist)
- Proof of payment of the applicable license fees
- $5,000 or $30,000 Washington motor vehicle dealer bond (Vehicle/Vessel Dealer, Vehicle Manufacturer, Registered Tow Truck Operator, or Wrecker Business Bond)
Once you’ve submitted your complete application, the Washington State Department of Licensing will review your case. If you meet all requirements, you’ll be issued your Washington auto dealer license.
You’ll have to renew your license every year, as well as your Washington auto dealer bond. Since your surety bond cost can change over time, it’s worth improving your financials, so that you pay less to get bonded.
Get Your Washington Auto Dealer Bond Today
Getting your Washington auto dealer bond starts with one simple step: just apply online today. If you have any questions about the bonding process or your bond application, our bonding experts are here to help - you can call us at (866)-450-3412.
It’s advised to keep copies of the original bond form, and all supporting licensing documents, for future reference.