What is a Surety Bond ? It’s a generic name for all bonds. Surety Bonds are usually required by the state or Federal Government; these bonds are called License and Permit Bonds.

most states require a Surety Bond

There are three parts of a Surety Bond, the first is the Obligee. They are the entity requiring the Bond (the State Government via your Local DMV agency).
Second is the principal. The Principal is the person whom will perform the contractual obligations set forth in the Bond Form (this is you and your automotive business).
The third part is the Surety Company. They are the entity who will be insuring the Bond (this is the insurance company or bond issuing company).

According to state DMV requirements, spplicants for a new vehicle dealer, used vehicle dealer, or broker’s license must obtain a surety bond. A surety bond is like an insurance policy and can be obtained from insurance companies or bonding companies. Different states have different minimum bond requirement amounts …$20,000 and higher. Auto dealer bonds are required from car dealerships in every state.

You shouldn’t confuse them with insurance. While your insurance protects the cars you sell, auto dealer (surety) bonds serve as protection for your customers. By posting an auto dealer bond, you promise to run your business ethically. That means knowing the state’s rules and regulations and acting in accordance with them. It also means treating your customers fairly and not using fraudulent business methods (ie. selling crappy cars, etc.)

An auto dealer bond is underwritten by a surety bonds company, which guarantees that you are capable of keeping the agreement. This makes the surety legally responsible to cover all losses, caused by any negligent behavior on your part. Of course, it makes you legally responsible too. Auto dealer bonds go by other names too, such as MVD bonds, DMV bonds or used-car dealer bonds

The exact price you’ll pay for a surety bond will vary for a few reasons, such as:
1. The required surety bond amount
2. Your application and financial credentials
3. If you choose to finance your bond premium
4. Your credit score

Generally, if your financial credentials qualify you for the standard market, your premium could be calculated as just 1% – 2% of the bond amount, which would only be $350- $700 (annually) for a standard $35,000 bond. Of course dealers with bad credit could pay a premium that’s a higher percentage of the bond amount.

However, If you want an alternative to the traditional method of going to your Local DMV to get your Auto Dealer License, contact me right away.. I can get you legal access to a metal Dealer Plate and access to the wholesale Dealer Only auto auctions around the country. All this without buying a Surety Bond ! –> Message me right away.