Wholesale Dealer Bond Arizona Overview
To get licensed as a wholesale dealer in Arizona, you will need to apply at the AZDOT. As part of your license application, you will have to post a $25,000 auto dealer bond.
Why do dealers need a bond?
Applicants for a wholesale dealer license in Arizona need to post a bond as a guarantee that they will comply with their legal obligations under state law.
The bond's purpose is also to protect anyone who is harmed by the actions of a bonded wholesale dealer. In such an instance, the harmed person may file a claim against the bond to request compensation.
When a claim is made against a bond, the surety company that backs the bond investigates the claim and then extends compensation to claimants in an adequate amount to cover for their losses. Such compensation can be as much as the full penal sum of the bond.
Find out more about how bonds work and why they are required from our detailed ‘What is a surety bond' guide!
See the sections below to find out more about the cost of getting this bond, details about the bond claim process, and how you can get bonded!
If you have any further questions about surety bonds, go ahead and call us at 866.450.3412!
What's The Cost of The Arizona Wholesale Dealer Bond?
The cost of your bond is equal to a certain percentage of its full amount. Upon reviewing your application, your surety will offer you a rate at which you can get bonded. That rate is influenced by the following factors.
Factors that determine your bond rate
Your personal credit score has the greatest influence on your bond rate of all factors that are taken into account.
Applicants with an excellent to moderate credit score can usually get bonded at a rate between .75% and 5% of their bond amount.
Applicants with a low or nonexistent credit score are instead offered a higher rate, from 5% to 10%.
The higher rate for applicants with lower scores is due to sureties finding it more likely that a claim will be triggered against their bond. For this reason, they require additional security when bonding such an applicant.
Apart from your score, there are several other factors that also influence your bond rate:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience
To get a sense of the cost of your bond, based on your credit score, see the table below!
|Arizona Wholesale Dealer Bond Cost Based on Credit Score
How Do Bond Claims Occur?
According to 28-4362 ARS, the bond required of dealers must be for the benefit of anyone who suffers a loss as a result of non-payment by the dealer of any taxes or fees related to a title or registration. Losses due to a dealer's failure to deliver a valid vehicle title certificate when selling a vehicle, that is free of liens and prior owners' interest are also covered by the bond.
In the case of such a violation and loss, a claim can be filed against the dealer's bond to secure compensation. The surety must then investigate the claim, and determine its validity as well as the appropriate amount of compensation to extend.
Once claimants are compensated, the surety will turn to the bonded dealer to be reimbursed for the claim. Under a bond agreement, it is always the bonded party that is liable for claims. For this reason, it is best to avoid giving rise to a claim in the first place, so as to avoid any costs that may arise out of it.
Get Your Auto Dealer Bond Here!
To apply for your bond, click the banner below and complete our quick bond form. Once you submit your form, you will hear from us shortly. We will provide you with a free and exact quote on your bond, along with more information about the bonding process.
For any further questions about this bond or if you need help with your application, call us at 866.450.3412!