Rhode Island Auto Dealer Bond Overview
To become an auto dealer and open a dealership in Rhode Island, you are required to obtain a dealer license from the Rhode Island Division of Motor Vehicles - Dealer’s License and Regulations Office.
A central requirement to become licensed is to post a Rhode Island auto dealer bond in the amount of $50,000. This bond guarantees that you comply with the rules and regulations governing car dealers in Rhode Island, and treat customers fairly and honestly.
The car dealer bond is an agreement between the principal (car dealer), the obligee (the Rhode Island DMV), and the surety bond company that provides financial backing of the bond. When the surety issues a bond to the dealer it actually issues a guarantee that if someone files a legitimate claim against the bond, the surety will compensate them up to the full bond amount. Ultimately, the principal is responsible for repaying the surety.
Claims against bonds are made when dealers are dishonest in their business practices and violate state laws that govern their business (in this case the Chapter 1499 Public Laws of 1956 of Rhode Island). Avoiding claims and conducting business honestly is the best course of action of dealers, as claims create serious financial difficulties and can harm a business’s reputation.
Here’s the Rhode Island auto dealer bond in a nutshell:
- Surety Bond Name: Rhode Island Auto Dealer Bond
- Surety Bond Amount: $50,000
Rhode Island Division of Motor Vehicles - Dealer’s License and Regulations Office
600 New London Avenue
Cranston, RI 02920-3024
- Expiration Date: December 31
For more information concerning the Rhode Island auto dealer bond, continue reading below.
Rhode Island Auto Dealer Bond Cost
Newly-licensed car dealers, and dealers who are renewing their license, must obtain and post a $50,000 auto dealer bond. This is not the cost of the bond, but the maximum amount of compensation that a surety may extend to a claimant.
The cost of the bond, the so-called premium, is a small percentage of that amount. The exact cost is determined by the surety issuing the bond, mostly based on an applicant’s personal credit score. Other factors that are also taken into account are:
- Personal and business financial statements
- Personal asset profile and liquidity
- Industry experience
The amount of your premium will be determined by your credit score and the status of these other factors. If you have a high credit score, you will typically be offered a low rate on your bond, somewhere between 1,5% and 3% of the total bonding amount.
|Surety Bond Cost by Credit Score|
|Surety Bond Name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Rhode Island Auto Dealer Bond||$50,000||$500-$1,000||$750-$1,500||$1,000-$2,000||$1,500-$3,500|
Which surety bond agency you work with can also influence the rate you are offered on your bond. For example, Bryant Surety Bonds works with some of the best and most reliable sureties in the country, all of which are A-rated and T-listed sureties. These sureties have access to a very large variety of markets and typically offer the lowest rates on their bonds. By working with us, you are working with them.
To make a rough calculation of the cost of your bond, try the surety bond calculator on the right. For a free and precise quote, apply online using our new online application form. Don’t hesitate to call us at 866.450.3412 to consult with our surety experts, if you require more information.
For more information concerning bond cost and tips on how to reduce your premium, visit our Surety Bond Cost page.
Bad Credit Auto Dealer Bonds in Rhode Island
Getting a bond with bad credit may seem problematic as sometimes sureties will turn down applicants who have a lower score. Luckily, together with our surety partners we have worked out solutions to offer to our customers who have a lower or nonexistent credit score.
Our Bad Credit Program makes it possible for applicants with bad credit to get bonded with the same expert surety companies, regardless of their credit score. Of course, rates for these bonds are slightly higher, yet they usually do not exceed 7% of the full bond amount.
Rhode Island Dealer License: Application and Renewal
When applying for your Rhode Island dealer license, you will need to:
- Complete the application for dealership / renewal form
- Have the name of the dealership approved by the Rhode Island DMV
- Submit a financial statement prepared by a certified public accountant
- Post a $50,000 Rhode Island auto dealer bond
- Owners and and partners must submit a Bureau of Criminal Identification form
- Submit a copy of lease agreement (if applicable)
- Copy of city/town license or zoning approval
- Pay a $301.50 license fee
Dealer licenses run out on December 31 each year, which is the deadline for you to have renewed them. To renew, you will be asked to submit some of these documents again, along with a renewed Rhode Island auto dealer bond, as well as pay a renewal fee. Bryant Surety Bonds will remind you well in advance of the approaching deadline.
Get Your Rhode Island Auto Dealer Bond Today
Apply online here for your Rhode Island auto dealer bond. Fill in your application in just a few minutes and we’ll take care of the rest. Once we’ve processed your application we will contact you with your personal and free bond quote.
Once your bond is issued you will be receiving it by mail within a few days time. If needed, we can also provide you with digital copies of your bond.
Do you need help? Call our surety experts at 866.450.3412 to receive further information or assistance. We look forward to hearing from you!