Auto dealer bonds are part of the dealer licensing process. They are also referred to as motor vehicle dealer bonds or DMV bonds. These bonds are a kind of contract that guarantees that auto dealer complies with all the federal, state, & local laws as well as the tax guidelines that relate to motor vehicles. In case the dealer or any of his employees commit a fraud or wrongful act, the consumer is protected from any consequences that arise from such actions. Hence, auto dealer bonds are mandatory when you apply for an auto dealership license in any part of the country. This article provides an overview of motor vehicle dealer bonds.
But most auto dealers do not understand how these bonds work. This is why it is important that you be educated on the importance of these bonds and how they actually work. A dealer should file their bond before they are licensed. Licensing agencies in 47 states require that auto dealers furnish a surety bond before they issued the dealership license. Citizens in Vermont, Delaware, and Ohio will not require furnishing a surety bond when applying for a dealership license. On the other hand, surety bonds will not protect the dealer but the consumer who buys the vehicle from the dealer. Most auto dealers are not aware of this fact. But the dealer cannot get their dealership license without furnishing a bond to the relevant authorities.
Although motor vehicle bonds are a kind of insurance product, they usually function like a line of credit that could be used to pay for certain work-related performance issues. The consumer is able to make a claim on the bond when a dealer is involved in any sort of malpractice or unethical issue while selling the vehicle. Government agencies also can make a claim on the bond if the dealer fails to implement the terms of the bond. Dealers should understand the consequences of agreeing to a surety bond when applying for a dealership license. They are legally binding contracts just like any other contract out there. The dealer should uphold the terms they are agreeing to at all times. Defaulting on the contract may have negative consequences in a court of law. You need to understand this situation before you agree to obtain a surety bond. You should maintain the surety bond as long as you have your dealership license. Failing to do so will get you into trouble.
Although there are many agencies that issue motor vehicle dealer bonds, all of these institutions are not create the same. You have to pick a reputed agency to obtain your auto dealership bond. This is where a reputed and experienced agency such as Bonds Express comes in handy. BondsExpress Surety and Insurance Agency originated in Syracuse, New York – almost 40 years ago. Now they offer a web-based nationwide surety bond service. They are one of the highly respected agencies in the industry today. Call them right now for all your surety bond issues.