Auto Dealer Bonds

Auto Dealer Bonds are the most common commercial surety bonds.  Auto dealer bonds help to protect states and consumers against fraud, misrepresentation or violation of any other state statute referenced in the auto dealer bond form by ensuring that auto dealers follow the state laws and regulations.  Auto dealer bonds are also known as MVD bonds, DMV bonds, user car dealer bonds.  Auto dealer bonds are an essential prerequisite for a dealer to obtain a license.

The auto dealer bond form and surety bond amount varies from state to state.  The effective dates of the bonds and expiration dates also are different for the individual states.  Only the individual state can lower or raise the amount of the auto dealer bond.  Hence costs will be different, depending on location, state requirements and the age of a given dealership.  The process for obtaining auto dealer bonds is similar to other surety bonds and the surety companies generally look into the past practices, financial health, management structure and other company aspects of the dealer before issuing an auto dealer bond.

The risk factor is considered to be high in auto dealer bonds as compared to other commercial bonds and dealers with below par sterling credit are likely to face higher premiums.  The application process for an auto dealer bond with a surety company is similar to that of applying for a loan.  The surety will obtain a credit report and review the financials of the applicant.

Inside Auto Dealer Bonds