Arkansas Car Dealer License Guide

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Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Arkansas auto dealer bond needs. Learn how to get an Arkansas car dealer license, and contact us today to request a quote on the bond you need.

What Are the Different Types of Arkansas Auto Dealer Licenses?

In Arkansas, anyone selling more than five vehicles in a 12-month span is required to be licensed as a dealer.

The Arkansas Motor Vehicle Commission issues licenses to retailers selling new motor vehicles as franchise dealers.

The Arkansas State Police handles the licensing of wholesalers and dealers who sell used motor vehicles.  This article focuses on the licensing of used car dealers.

What Are the Steps in the Licensing Process?

This article focuses on the licensing of used car dealers. Key steps in that process include:

  • Purchasing an auto dealer bond in the amount of $25,000
  • Purchasing a liability insurance to cover all vehicles offered for sale
  • Taking photographs of the dealership location and signage
  • Downloading and completing the license application
  • Gathering any other documentation required by the dealer license application
  • Paying the license fee (currently $250)
  • Mailing the completed application and all supporting materials to the Arkansas State Police in Little Rock

Why is an Arkansas Auto Dealer Bond Required?

An Arkansas auto dealer bond is intended to ensure that auto dealers conduct business in accordance with all applicable state laws and regulations. Failure to do so gives any party incurring a financial loss as a result of that violation the right to file a claim against the bond to recover damages.

How Are Arkansas Auto Dealer Bond Claims Paid?

An Arkansas auto dealer bond is a legally binding contract among three parties:

  • The “obligee” requiring the bond is the Arkansas State police.
  • The “principal” is the used car dealer, who is legally obligated to pay all valid claims against the bond.
  • The “surety” is the company that is guaranteeing the bond.

When a claim is filed, the surety conducts an investigation to make sure that it’s valid and should be paid. Then, unless the principal pays the claim right away, the surety will pay it on the principal’s behalf. That payment is essentially a loan made to the principal, who must repay it. Remember, the terms of the surety bond agreement, the surety guarantees payment, but the obligation to pay rests with the principal. Failure to repay the surety can result in the surety taking legal action against the principal.

How Much Does an Arkansas Auto Dealer Bond Cost?

The annual premium for an Arkansas auto dealer bond is calculated by multiplying the required $25,000 bond amount by the premium rate set by the surety on a case-by-case basis.  The surety’s main concern is the risk of not being repaid for claims paid on the principal’s behalf. The best measure of that risk is the principal’s personal credit score.

There is an inverse relationship between the principal’s credit score and the premium rate. A high credit score results in a low premium rate, while a low credit score results in a high premium rate. With excellent credit, the annual premium for an Arkansas auto dealer bond could be as low as $250.

Our surety bond professionals will get you the Arkansas auto dealer bond you need at a competitive rate.