Things You Must Know about Auto Dealer Bonds
Before receiving an auto dealer license, auto dealers in most states must file a surety bond with the state’s Department of Motor Vehicles (DMV). Surety bonds are specifically designed to protect customers and the state from auto dealers that commit fraud. A surety bond is assurance that your dealership will follow the car dealership legislation and regulations in your state.
Similar to other types of surety bonds, auto dealer bonds also provide financial guarantees that help regulate the industry. This bond protects customers, sellers, financial enterprises, and/or government agencies. In case a dealer commits fraud or conducts business in an unethical manner, the bond helps these entities recover from any resulting financial loss.
Some of the most common types of auto dealer bonds include DMV bonds, RV bonds, motorcycle dealer bonds, used car dealer bonds, and wholesale car dealer bonds. The need to file auto dealer bonds generally depends on where you work and what kind of dealership you plan to operate. If you are confused about which bond you require or how to file a bond, you should get advice from a bond professional.