Used Car Dealer Bond

What is an Used Car Dealer Bond?

Most states require individuals looking to get their used car dealer’s license to file a surety bond with the state’s Department of Motor Vehicles (DMV).

A used car dealer bond is a type of License & Permit Bonds bond that dealers must acquire before opening their business. The used car dealer bond protects the consumer from fraudulent, misrepresentation or unethical actions by a car dealer. The used car dealer surety bond also guarantees the dealer is financially secure. In situations where a customer is cheated by a dealer, the surety bond will repay that customer.

FAQs

What is the cost of an used car dealer bond?
Bond costs are a percentage of the total bond amount. They vary between 1-3% for most applicants but may go as high as 5-8% for higher risk applicants. The biggest factors of bond cost include the bond amount, duration, and your financial credentials. Costs may also vary by state. However, pricing for most used car dealer bonds is fairly standard based on the above criteria.

What if I have bad credit?
You can still qualify for an used car dealer bond. Keep in mind that personal credit is one of the main factors considered when writing these bonds as your financial credentials are seen as an indicator on the likelihood that a claim will be made against a bond. Therefore, higher risk applicants may still be accepted, however, may be assessed a premium amount.