A recently passed bill in Alabama has amended the surety bond amount for motor vehicle dealers in the state. Beginning October 1, 2020, auto dealers will need to post an auto dealer bond in an amount of $50,000 in order to obtain or renew their license.
The bill also makes several other amendments to the licensing requirements for auto dealers, such as the number of penalties, the duration of licenses, fees to be paid, and more.
Keep reading for an overview of the auto dealer bond increase in Alabama, and other changes!
Alabama House Bill 393
HB 393 introduces several important amendments to the current auto dealer license regulations in Alabama. Most of these amendments will not come into effect prior to October 1, 2020, though. Here are the most important changes to the auto dealer regulations in Alabama:
- A “master dealer license” category is introduced which encompasses the new, used, wholesale, and rebuilder licenses
- Master dealer licenses will be valid for one year and must be renewed on October 1 each year. A grace period of 30 days for obtaining a license will be allowed, after which there will be penalties for late renewals
- After October 1, 2022, the Department of Revenue may introduce a bi-annual license
- Anyone who is required to obtain a license under the law but fails to do so will be liable for a first-time penalty of $500 and a penalty of $1,000 for any subsequent violation
- Application fees will be amended to be equal to the average annual dealer fees of the states that are contiguous to Alabama and will be rounded to the nearest $25
- Every applicant for a master dealer license will need to provide an auto dealer bond of at least $50,000 (or another amount prescribed by the Department) as part of their license application process
These are the most important amendments introduced by HB 393 to the current auto dealer regulations in Alabama. See the next section for a more detailed explanation of the surety bond requirement.
Alabama Auto Dealer Bond Increase and Requirement
Until now, and for the next year and a half, dealers in Alabama will need to post a $25,000 bond. Once HB 393’s changes come into effect, dealers will need to post a bond in the amount of $50,000.
The conditions of the bond will mostly remain the same. Dealers are required to post this bond as a guarantee that they will comply with the provisions of the law that govern their business. The bond also guarantees their compliance with any contracts they have in relation to the sale or exchange of motor vehicles.
Finally, HB 393 also states that the bond will serve to cover the penalties specified in the bill as well as tax liabilities that arise from the sale of vehicles.
How much does it cost to get bonded?
The cost of your bond will depend on your credit score and other financial indicators. Your surety will offer you a bond rate, which is equal to a certain percentage of the total amount of your bond.
Applicants with medium to high credit scores can usually rely on a premium of about .75% to 5% of the total amount of their bond.
Would you like to get a free quote on your bond? Complete our simple bond form, and we will contact you shortly with your quote, with no obligations attached!