Motor Vehicle Dealer Bond FAQs | Bonding Solutions

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Motor Vehicle Dealer Bond FAQs

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Motor vehicle dealer bonds also referred to as Auto Dealer bonds are a type of surety bond that provides a guarantee that the licensed auto dealer will adhere to state laws, statutes, and regulations related to his/her dealer licensing. It is essentially a contract between the dealer (the principal) and the surety (the obligee) that assures a dealer’s performance of pertinent state licensing regulations. Each state’s regulations differ when it comes to licensing but they all require an MVD bond in order to protect consumers and the government from fraudulent behavior performed by a dealership and its’ employees. To start an application for a motor vehicle dealer bond, contact Bonding Solutions today!

FAQs Concerning Auto Dealer Bonds

Who is required to obtain the bond?

The dealership owner is required to show proof of a motor vehicle dealer bond prior to applying for a dealership license. The dealership owner can contact a surety agency to learn more about the bond requirements specific to the state they are conducting business.

How much will an auto dealer bond cost?

The cost of an auto dealer bond ranges on the necessary coverage based on the size of the dealership. The bond itself can be quite expensive but the dealership owner will only pay a portion of this cost, also called the premium. Bonding Solutions has the ability to underwrite any motor vehicle dealer bond in any state for any amount. We have specialty programs set in place to help all of our clients obtain the right bond at the right price.

How much is a typical bond premium?

The bond premium that the principal is required to pay is usually between 1-3% of the total bond cost (so long as they have good credit and good standing with the surety). If the person applying for the auto dealer bond has poor credit, it is likely they will pay a higher premium as they are seen as a bigger risk to the surety.

Who and what does the motor vehicle dealer bond protect:

The MVD bond protects consumers and the government from auto dealers who fail to follow all regulations, laws, and licensing agreements.

How an MDV Bond Protects Consumers:
  • Protects from intentional fraud against consumers
  • Protects from wrong or inaccurate vehicle information being issued
  • Protects from deceptive financing offerings
  • Protects from tampering with the odometer
  • Protects from failure to provide warranties as agreed in the bill of sale
  • Protects from faulty service on vehicles
How an MVD bond protects the government:
  • Dealership’s failure to report all earnings
  • Dealership’s failure to adhere to license regulations and standards
  • Dealership’s failure to pay sales tax or applicable fees

How do I apply for an Auto Dealer Bond?

It is simple! Click here to start your easy 2-minute online bond application and receive a quote same-day from the Bonding Solutions team. As long as we have the right information, financials, and personal details, we can provide quotes within the hour.

Who can make a claim against the Motor Vehicle Dealer Bond?

A consumer who purchased a vehicle from the dealership or the government can make a claim against the MVD bond. The claim will go through the normal investigation period before a decision is made whether the claim is in fact valid. The surety agency who wrote the bond will investigate the claim. There can be one of two outcomes once the investigation is completed: either the surety will conclude that the claim made was false or there was not enough proof to coincide with the claim or the surety will, in fact, agree that the claim is legitimate, in which case the principal will be responsible for any and all costs accumulated from the claim and investigation.

Do Auto Dealer Bonds Renew Automatically

It is important to talk to your Surety Bond Agency about the renewal process for your motor vehicle dealer bond. Each year you will be required to renew the bond, but depending on the approval process, your premium may change. Bonding Solutions can get you the lowest rate on the market and ensure a fast approval time so that your business never suffers.

How long does it take to get a Motor Vehicle Dealer Bond?

Quotes for an auto dealer bond can be provided within hours of inquiry, often without running a full credit check. To obtain the actual surety bond, it is important to provide your surety agent with the correct financial information from the start to ensure a quick approval process. If all financials provided check out, we have the ability to underwrite MVD bonds on the same day as the inquiry was made. The Bonding Solutions Team has the resources to provide you with fast approval at an affordable rate. We are the leading provider for auto dealer bonds nationwide.

How Can I Qualify for an Auto Dealer Bond?

Qualifications for MVD bonds differ from state-to-state but in general, bond approval is fairly simple. With good credit, good bond history, and the appropriate financials, we can help you get qualified for an auto dealer bond at an affordable rate.

Why Should I go with Bonding Solutions as my Surety Agency?

We are a surety agency that focuses on the unique needs of our clients and providing tailored bond programs that offer them the most competitive advantage for their business. We want to continue to satisfy our customers, educate our employees, and aid in the success of our partners. Our team is comprised of some of the most innovative, experienced and hard-working people you’ll ever meet. We thrive on being different, offering our clients a streamlined experience, paired with superior surety products.

Auto Dealer Bond Infographic

Below is an infographic explaining auto dealer bonds and how they work. For more information or to apply for an MVD bond click here! Also, if you are looking for a state-specific auto bond and information on it, click on the state at the bottom of the map to search for your motor vehicle dealer bond!

Auto-dealer-Bond-Infographic

 

 

published on Thursday, August 27th, 2020

 

Questions?

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(877) 841-6745