If you plan to become a Georgia auto dealer, you must secure a license to legally operate your car dealership within the state. Georgia requires most car dealers to become licensed, and there are several licensing requirements you must meet. In addition to submitting a license application and paying a license fee, there are several other things you must do. The state of Georgia has a bond requirement for most motor vehicle dealers, and you must purchase an auto dealer surety bond before the state's motor vehicle dealer board will issue a motor vehicle dealer license. The license type you need to work as a car dealer will depend on what you intend to do within the auto dealing business. However, getting bonded is a general requirement for most license types. After you secure your bond, it will expire biennially.
You must take steps to maintain and renew it before the expiration date so that you can keep your auto dealer license in good standing. Your Georgia motor vehicle dealer application will not be approved if you fail to meet the bond requirement, and if you fail to comply with the conditions of your bond, you could lose both your bond and your license. Here is some information that Georgia car dealers should know about the state's bond requirements.
What Is a Georgia Auto Dealer Bond?
A Georgia motor vehicle dealer bond is an enforceable contract between the following three parties:
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Principal - The party required to purchase an auto dealer bond for licensing purposes
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Obligee - The Georgia Department of Motor Vehicles (DMV), which is the state agency that issues and enforces the state's licensing requirements, including the bond requirement for would-be car dealers
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Surety - The bond company that issues the bond as a guarantee that the principal will comply with the law
Some people in Georgia wrongly think that surety bonds are insurance. However, a motor vehicle dealer bond does not protect you against legal claims and instead is designed to protect the state and consumers in case you commit a bond violation and break the law or engage in misconduct. It is a type of credit and is not insurance.
At the time the surety company approves your bond application for an auto dealer bond, you will have to sign an indemnity agreement through which you will agree to reimburse the bond company for any valid claims that might be filed against your surety bond. This agreement is enforceable. If you break the law or commit other bond violations, the obligee or a harmed customer can file a surety bond claim. The surety will pay a claim that is filed against your bond up to the maximum bond amount. However, you will have to repay the surety or face legal action in court. Violating the conditions of your auto dealer bond could result in the revocation of your license and the loss of your business.
How Much Does a Georgia Auto Dealer Bond Cost?
The auto dealer bond cost you might expect to pay will depend on your license type, your credit score, and other factors considered during the underwriting process. New car dealers are not required by the state to be licensed and bonded, but they might have local requirements from the municipalities in which they are located. If you want to become a used motor vehicle dealer, you must secure a surety bond in the amount of $35,000. The bond amount required for used vehicle parts dealers in Georgia is $10,000.
While these amounts might seem high, the bond cost you will pay to secure your bond will only be a small percentage of the total bond amount. The percentage will range from 1.5% to 4% in most cases, so your bond premium for a Georgia auto dealer bond will be from $525 to $1,400. For a used vehicle parts dealer bond, the pricing will range from $150 to $400.
Your costs will be lower if you have an excellent credit score. To get an idea of the pricing you might expect based on your credit, you can review the information in our surety bond cost guide for more information about the bond cost. You can also use the cost calculator therein.
How Can I Get a Georgia Auto Dealer Bond?
When you apply for a car dealer license, you will have to pay an application fee, submit a bond form showing you have complied with the bond requirements, and meet other criteria established by the motor vehicle dealer board. To get an auto dealer bond, you can complete a bond application with a surety company. The company might also ask you to submit some of the following types of documents to review during the underwriting process:
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Debt and asset schedules
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Bank statements
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Resumes for each partner
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Tax returns
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Reference letters
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Bank reference
After you have completed your application, the company will send it through the underwriting process. The underwriters will review your application, your credit history, and other factors to determine the risk the company would face by approving you for a bond. If you are approved, the company will provide you with a free quote for the bond premium you will have to pay to secure the bond.
If you agree to the bond quote, you will have to sign an indemnity agreement and agree to indemnify the surety company against any bond claims that might be filed and pay the bond premium. The surety will then provide you with a bond form and send a copy to the state. Once you have met your other requirements, submitted your license application, and paid your application fee, the state will then issue the auto dealer bond to you. To get started with the process, please complete our online application.
Can I Get a Georgia Auto Dealer Bond With Bad Credit?
While your credit score is an important factor in determining your bond premium, you can still get a surety bond with poor credit. However, your bond premium percentage will be much higher than if your credit was good. One way to get a surety bond with poor credit is to go through our Bad Credit Program. Once you receive your bond, you can then take steps to build your credit to enjoy lower costs in the future when it's time to renew your bond.
Who Should Get a Georgia Auto Dealer Bond?
There are two primary types of auto dealers in Georgia that need to secure licenses and must be bonded, including used car dealers and used car auto parts dealers. New vehicle dealers must also get a franchise dealer's license, and they might have additional licensing requirements in the municipalities in which they operate.
If you are an individual who sells five or more vehicles per year, you must get an auto dealer's license to legally operate. You will also need to purchase a Georgia motor vehicle dealer bond to get your license.
If you want to open a dealership in Georgia, getting a dealer surety bond is something you will be required to do to operate in the state. Improving your personal credit and avoiding bond claims can help reduce the costs you will have to pay for a car dealer bond. Once you pay your license fee and purchase your motor vehicle dealer surety bond, you can work on growing your business and profits.
Get Your Georgia Auto Dealer Bond Today
It’s easy to start your bonding process. You just need to apply online to get your free, no-obligations quote, or call 866.450.3412. Our bond experts can also assist you during your application process, so don’t hesitate to ask.
To help you get bonded, we’ll need your financial statements and some personal documents, so we can get you the best possible bonding rate on the basis of your business’s status
Along with your application, you must use the specific Georgia bond form that applies to your business. Don’t forget to sign it once you get the completed bond. As with other documents, make sure to save a copy for future reference too.
