What is a Used Car Dealer Bond?
Some states may require an auto dealer to obtain a used car dealer bond if they plan to sell pre-owned vehicles through their dealership. This might be needed in addition to the auto dealer bond.
These types of bonds help protect consumers who purchase a pre-owned vehicle through a dealership from fraud and other wrongdoings from an auto dealer and his or her employees.
If you are unsure if you need to purchase a separate used car dealer bond for your dealership, contact us today to speak with a licensed agent. They will be able to walk you through the process of getting your used car dealer bond so that you are covered.
How much will a used car dealer bond cost?
The cost of a used car dealer bond premium is a small percentage of the total bond amount. A qualified applicant could pay as little as 1% of the bond to get covered. Submit your request for a free quote today, and we will work quickly to make sure you have all the paperwork you need to meet your state’s requirements for your business.
How does the used car dealer bond work?
This bond helps protect consumers from purchasing a vehicle that has been misrepresented by the salesperson. It also prevents dealerships from using unethical business practices, failing to provide a valid title for the vehicle, or failing to pay required sales tax and motor vehicle fees to the state.
If anything like this occurs, a claim can be filed against the bond to compensate either the state or the consumer who has suffered a loss because of the actions of the dealership.
In a used car dealer bond, there are three parties: the obligee, the principal, and the surety. The obligee is the state agency that requires a dealership to obtain the bond. The principal is the company or individual who must purchase the bond. The surety is the company that agrees to issue a payment on behalf of the principal if the terms of the bond are not met. When a surety company has to issue a payment, the principal will be responsible for reimbursing the surety company for any money paid out of the claim.
Having a bonded company gives the public more confidence in doing business with your dealership. They will feel that there is less risk because you made a financial commitment to follow your state’s regulations when it comes to used car sales.