Surety Bonds and Automobile Dealers
 | Let's face it. Running your own business is hard enough. Along with issues relating to taxes, licensing, business planning, accounting and others, there always seems to be some "gotchas" that popup along the road to achieving business results. This is the case with surety bonds. Most small business owners usually are unfamiliar with surety bonds when they first startup their business. It happens to be during the licensing period of business organization that a surety bond has a tendency to pop up the most. This is because many US states have extensive surety bonding requirements for companies that are licensed within.
auto dealer bond A surety bond is a three party agreement where one party, the obligee, requires a second party, the principal, to perform certain activities. The surety bond is prepared and warranted by the third party, the surety, which is often a large insurance company. If the principal fails to perform its responsibilities, the obligee can attempt to recover monetary losses from the surety company through the surety bond. As for states requiring surety bond for various businesses, such is the case with the automobile industry, specifically car dealers. Many states require motor vehicle dealers to have a car dealer bond in order to operate their dealership within the state. The core purpose of this surety bond is to protect the consumer in case the dealership conducts business in a way that could negatively affect the consumer financially. It is important to realize that each state has a distinct set of surety bond requirements. The bonds go by a few different names, such as auto dealer bond, car dealer bond, motor vehicle dealer bond, MVD bond, and more. Below are some of the surety bond requirements for new and used (retail) automobile dealers in specific states: California: A $50,000 surety bond is required. Florida: A $25,000 surety bond is required. Georgia: A $35,000 surety bond is required for used car dealers only. New York: Up to a $50,000 surety bond is required, depending on the type of dealership. Texas: A $25,000 surety bond is required every two years. No matter which state it is located in, car dealers ought to be sure to check with the state’s department of motor vehicles to ascertain the current bond requirements. Not only do these criteria vary by state, they are modified from time to time. The state DMV will have the most current information available concerning the bond requirements. surety bond |
