Connecticut 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 Connecticut car dealer license bond needs.

Learn how to get a Connecticut car dealer license and contact us today to request a quote on the bond you need.

What Are the Different Types of Connecticut Car Dealer Licenses?

The Connecticut Department of Motor Vehicles issues Dealer/Repairer licenses to dealers selling new or used motor vehicles and to repair shops, with different requirements for each. This article addresses only the licensing of used car dealers. The licensing of new car dealers is very similar but requires documentation of a contract or franchise agreement with a vehicle manufacturer.

What Are the Steps in the Licensing Process?

All of the forms and instructions for obtaining a Connecticut car dealer license can be downloaded from the Connecticut DMV website.

In addition to completing all the necessary forms, you’ll need to gather certain supporting documentation to submit with your application package, such as:

  • Local zoning approval
  • Trade name certificate from town clerk
  • License inspection application
  • Proof of insurance coverage
  • Sales tax permit from the Connecticut Revenue Service
  • Certificate of Existence from the Connecticut Secretary of State
  • Auto dealer surety bond in the amount of $50,000

Submit your completed application package in person or by mail to the DMV. The application fee (currently $140), license fee (currently $560 for used car dealer licenses), and other fees need not be paid until after the application has been submitted and approved. The dealership location must be inspected and approved before the dealer license will be issued.

Why is a Connecticut Car Dealer Bond Required?

A Connecticut car dealer bond is a type of license and permit surety bond. It serves multiple purposes:

  • Serves as the dealer’s guarantee to operate in accordance with all laws governing auto sales in Connecticut
  • Protects the state against financial loss due to the nonpayment of taxes, fees, or fines owed by the dealer
  • Indemnifies the state against liability for damages incurred by consumers because of the dealer’s unlawful or unethical actions
  • Provides a way to compensate consumers for such damages

Dealers who do not keep a valid Connecticut car dealer bond in force at all times may be subject to license suspension or revocation.

How Are Connecticut Car Dealer Bond Claims Paid?

The surety bond agreement forms a legally binding contract among three parties:

  • Connecticut DMV (the “obligee” requiring the bond),
  • The car dealer (the “principal” required to purchase the bond and pay all valid claims), and
  • The company guaranteeing the payment of claims (the “surety”).

The surety investigates every claim upon receipt and determines whether it is valid and should be paid. Then, although the legal obligation to pay claims rests entirely with the principal, the surety typically will pay a valid claim first, on behalf of the principal, and then collect reimbursement from the principal. If the principal does not repay the surety within a given timeframe, the surety has the right to take legal action against the principal.

How Much Does a Connecticut Car Dealer Bond Cost?

When you apply for a Connecticut car dealer bond, your application will go through an underwriting process to determine what your premium rate will be. The main consideration is how much risk the surety will be assuming in agreeing to pay claims on your behalf. The best indicator of that is your personal credit history, specifically your personal credit score.

If your credit is good, the risk to the surety is considered to be low and therefore worthy of a low premium rate, typically in the range of one to two percent. That would make the annual premium for your $50,000 Connecticut car dealer bond in the vicinity of $500 to $1,000. A lower credit score will result in a higher premium rate.

Our surety bond professionals will get you the Connecticut car dealer bond you need at a competitive rate.