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 Maine auto dealer bond needs.
Learn how to get a Maine car dealer license, and contact us today to request a quote on the bond you need.
What Are the Different Types of Maine Auto Dealer Licenses?
In Maine, car dealers are licensed by the Bureau of Motor Vehicles (BMV), part of the Department of the Secretary of State. The two major license categories are new car dealers and used car dealers. The focus here is on the licensing of used car dealers. When you fill out the license application, you’ll check a box indicating the specific type of vehicles to be sold.
What Are the Steps in the Licensing Process?
Let’s assume that you already have created a legal business entity and registered it with the Maine Revenue Services, so you have the tax ID number you’ll need to provide in your dealer license application.
There are a few other things you’ll need to do prior to submitting your application, including:
- Securing a permanent business location that meets state requirements for a used vehicle dealership and getting local zoning approval
- Taking photos of the location and drawing a plot plan
- Agreeing to a criminal history background check
- Purchasing the proper amount of liability insurance
- Purchasing a Maine auto dealer bond in an amount determined by the estimated number of first-year vehicle sales
If you have never been licensed in Maine as an auto dealer before, you must complete the Dealer/Title workshop conducted by BMV before your license will be granted. Your location will also need to pass an inspection.
Be sure to obtain documentation proving that you have accomplished all of the above. The dealer application packet contains all of the forms that need to be completed (and in some cases notarized), as well as detailed application instructions. Submit your completed application and all supporting documents, along with payment of the application fee and license fee (each currently $150) to the Secretary of State, Bureau of Motor Vehicles, Dealer and Agent Services in Augusta.
Why is a Maine Auto Dealer Bond Required?
A Maine auto dealer bond is a dealer’s guarantee to do business in comply all applicable Maine laws governing auto sales, specifically Title 29-A, Chapter 9 of the Maine Revised Statutes. Any violation of the terms of the bond that results in financial harm to the state or to a consumer can result in the injured party filing a claim against the bond. The bond ensures that funds will be available for paying valid claims.
How Are Maine Auto Dealer Bond Claims Paid?
First, understand that a Maine auto dealer bond is a legally binding contract among three parties—MVB (the “obligee” requiring the bond), the dealer (the bond’s principal”), and the company guaranteeing the bond (the “surety”). The principal is solely responsible for paying any claims that the surety determines to be valid.
There’s a twist, though, because a surety bond functions much like a line of credit. The surety will pay a valid claim initially, on behalf of the principal, which creates a debt that the surety must subsequently pay back. If the principal fails to repay the surety, the surety can take legal action to recover the claim amount (plus court costs and legal fees).
How Much Does a Maine Auto Dealer Bond Cost?
Maine auto dealer bonds are subject to underwriting. The primary goal of the underwriters is to set a premium rate commensurate with the risk inherent in paying claims for the principal and waiting to be repaid. The best measure of creditworthiness is the principal’s personal credit history. A principal with a high personal credit score will be assigned a much lower premium rate than one who has lesser credit, potentially as low as one percent of the required bond amount.
Our surety bond professionals will get you the Maine car dealer bond you need at a competitive rate.
