Used Car Dealer Bonds
To obtain a used car dealer's license you must present a used car dealer's bond when you submit your application. Obtaining a permanent license can take more than 120 days to be issued. SuretyBonds.com understands that starting the process and getting your used car dealer bond quickly is important.
Surety bonds are needed in many different industries, such as Mortgage, Real Estate, Talent Agencies, and Real Estate.
How the bond works
The used car dealer bond is also known as the auto dealer bond, the auto dealer bond and the DMV bond. Under its many aliases the used car dealer bond ensures auto dealers will act in conjunction with the guidelines set by their respective states. If the auto dealer fails to do so, the bond company will pay for the expenses incurred. The used car dealer bond provides security to consumers.
The used car dealer bond is a type of license surety bond between three parties:
- the principal—performs the actions outlined in the contract (the dealer)
- the obligee—receives the principal's actions (the customer)
- the surety—guarantees the principal will perform the actions set out in the contract (the bond company)
The principal pays an annual amount to the surety company in exchange for financial reassurance. If the principal defaults on the obligee then the obligee can make a claim against the bond. If the surety determines the claim is valid then the surety reimburses the obligee, and the principal will have to repay the surety.
Rates
Bonding companies consider used car dealer bonds to be moderate risks. The specific rate depends on the principal's potential ability to pay back the full amount of the claim. If the principal's credit score and financial statements do not suggest that he or she could pay back the full amount, then the bond will not be granted.
