Massachusetts Auto Dealer Bonds
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 Massachusetts auto dealer bond needs.
What Are They?
Massachusetts auto dealer bonds are required of certain auto dealers in order to obtain a license to operate within the state. The bonding requirement is intended to help ensure dealer compliance with the laws regulating auto trading in Massachusetts. It also provides a way for those financially harmed by a licensed dealer’s noncompliance with the law to recover damages.
Who Needs Them?
Massachusetts licenses auto dealers in three classes, but only Class 2 licenses, for dealers selling used vehicles, carry a bonding requirement. A Massachusetts auto dealer bond in the amount of $25,000 must be submitted to your local licensing office if you are applying for a Class 2 license. (Although the Massachusetts Registry of Motor Vehicles, or RMV, is the regulatory authority, auto dealer licenses are submitted and issued locally.)
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
When you purchase a Massachusetts auto dealer bond, you are entering into a legally binding contract with two other parties: RMV, the obligee requiring the bond, and the surety guaranteeing the payment of claims. You, the dealer, are referred to as the bond’s principal.
As the principal, you are legally obligated to pay any claim that the surety determines is valid. But as the guarantor, the surety normally pays a claim initially on your behalf, and then collects reimbursement from you. If you fail to repay the surety for a claim paid on your behalf, you could end up being sued by the surety and be required to pay court costs and legal fees as well as the original debt owed to the surety.
What Do They Cost?
Your annual premium for a Massachusetts auto dealer bond is the product of multiplying the required $25,000 bond amount by the premium rate the surety assigns you as the principal. The surety’s main concern is the risk that you might not readily repay the debt you could end up owing the surety for paying a claim on your behalf. The risk of that happening is best measured by your personal credit score.
If you have handled credit responsibly in the past and have a high credit score, the risk to the surety is considered low, and your premium rate will be low as well, perhaps less than one percent. If your credit score leaves something to be desired, your premium rate will be higher.
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Our surety bond professionals will get you the Massachusetts auto dealer bond you need at a competitive rate.