An auto dealer is required to get licensed before commencing their business. An auto dealership is a business for sells new or second-hand cars for an agreed consideration. They act as a mediator between the manufacturing company and the customers.
THE PURPOSE OF AUTO DEALER BONDS
Auto dealer bonds are required by state law to prevent any fraudulent activity carried out by the auto dealer. These bonds provide compensation to a customer in the event of failure to comply with the law and regulations. A Certificate of Title Bond may also be required if there is a problem with establishing legal ownership of a vehicle, such as a missing or defective title. A customer can also seek a refund in the event of manipulation of the odometer or the title of the car. The customers are entitled to file a claim for a bond.
WHO NEEDS A MOTOR VEHICLE DEALER BOND?
A franchise owner, second-hand vehicle dealer, bike dealer, and wholesale dealer have to hold a surety bond to commence their business. Other niche dealers are required to hold surety bonds.
AUTO DEALER BOND COST
The cost of an auto dealer bond depends upon three main factors.
1st factor: the limit of the bonded amount.
2nd factor: the credit of the dealer associated with the business.
3rd factor: the number of years of experience of the dealer.
You have the choice of obtaining the surety bond at a monthly cost or a yearly discounted rate.
CLAIM PROCESS FOR AUTO DEALER BONDS
The claim process against the dealers starts with filing a claim with the surety company. After receiving the application, the surety company shall start investigating the matter to determine validity. If the claim is proved genuine, then the surety company shall compensate the applicant up to the bond value. Afterwards, the dealer is obliged to repay the surety company for the damages caused by them.
WHEN CAN A BOND CLAIM BE MADE TO JET?
The claim can be made from the effective date to the end of the bond liability period to a surety company. This period is crucial, as the customer has to claim within this period only. If a customer has suffered any loss for any transaction with the auto dealer, then they have to apply to the surety company during the active period.
HOW MUCH BOND COVERAGE IS PROVIDED?
The limit on the bond value varies from state to state. The value can range from $5,000 to $100,000, depending on the decision of the respective state. The bond limit also depends on the type of auto dealer business you are running. Under no situation, the surety company compensate more than the bond value.
CONCLUSION
An auto dealer business is required to comply with the law and regulations. If they fail to comply with the law, whether intentionally or mistakenly, then they should be ready to face legal consequences. A customer can always file a claim against the dealer in the event of fraud or misrepresentation.
