Mississippi 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 Mississippi auto dealer bond needs.
What Are They?
A Mississippi auto dealer bond provides financial protection for the state of Mississippi as well as for consumers by requiring the dealer to comply with all applicable laws and regulations or pay damages to any party injured by the dealer’s noncompliance.
For example, not remitting required tax payments to the state is a violation that gives the state the right to file a claim against the auto dealer bond to recover the funds. And a consumer who is financially injured by a dealer’s unlawful or unethical act, such as altering a title or providing misleading information about a vehicle’s condition can similarly file a claim and be compensated for the damages.
Who Needs Them?
In Mississippi, if you sell even one vehicle for a profit, you are required to obtain an auto dealer license. The definition of “vehicle” is broad and includes both new and used cars, trucks, motorcycles, and some trailers and recreational vehicles. Anyone applying for a Mississippi auto dealer license must provide the Mississippi Department of Revenue, Motor Vehicle Commission with a Mississippi auto dealer bond in the amount of $25,000 per location. There must be an active auto dealer bond in force at all times of the dealer’s license to do business can be revoked.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
Surety bond agreements use specific terms to refer to the three parties to the legally binding contractual arrangement:
- The “obligee” is the party requiring the purchase of a Mississippi auto dealer bond — the Department of Revenue.
- The “principal” is the dealer purchasing the bond and legally obligated to pay all valid claims against it.
- The “surety” is the party guaranteeing the bond.
When a claim is filed, the surety first makes sure that it is valid, then pays it on behalf of the principal. But the legal obligation to pay claims still belongs to the principal and now shifts to repaying the surety. Failing to repay the debt owed to the surety can result in the surety taking legal action against the principal.
What Do They Cost?
Two factors go into calculating the annual premium for a Mississippi auto dealer bond: the $25,000 bond amount and the premium rate assigned to the dealer by the surety. Premium rates range from a low of less than 1% to 2-3% or even more, depending on how risky the surety thinks it would be to pay claims on behalf of the principal with the expectation of being repaid within a certain period of time. That risk is assessed based largely on the principal’s personal credit score.
The risk of not being repaid by someone with a high credit score is low, which warrants a low premium rate. However, someone with a low credit score presents a higher level of risk and results in a higher premium rate.
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Our surety bond professionals will get you the Mississippi auto dealer bond you need at a competitive rate.