Missouri 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 your Missouri auto dealer bond needs.
What Are They?
When a surety bond is required as a condition for licensure, it’s referred to as a license and permit bond. That’s what Missouri auto dealer bonds are—a type of license and permit bond. They’re intended to ensure that licensed auto dealers operating in Missouri abide by all applicable state laws and regulations governing motor vehicle sales.
Any party with a proven financial loss stemming from the unlawful or unethical business practices of a Missouri auto dealer has the right to file a claim for compensation against the dealer’s bond. The Missouri Department of Revenue can file a claim for unpaid taxes and fees owed to the state. Consumers can file for recovery of financial losses due to dealer violations, such as falsifying odometer readings or concealing the fact that a vehicle was previously damaged in an accident or flood.
Who Needs Them?
Every applicant applying to the Department of Revenue for licensing as a motor vehicle dealer selling new and/or used vehicles must provide the Department with a surety bond for $50,000—the bond’s penal sum. That’s the maximum amount that will be paid out on a single claim.
Every Missouri auto dealer bond must be continued or renewed by December 31 of each calendar year in order to avoid revocation of the auto dealer license.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A surety bond agreement is a legally binding contract between three parties known in surety bond lingo as the “obligee,” the “principal,” and the surety.” In the case of a Missouri auto dealer bond:
- The obligee is the Missouri Department of Revenue requiring the bond.
- The principal is the auto dealer who is required to purchase the bond.
- The surety is the bonding company that underwrites and approves the bond.
The terms of the surety bond agreement make the principal solely responsible for paying valid claims against the bond. However, it’s common practice for the surety to pay a claimant directly and then be reimbursed by the principal. In essence, in selling a Missouri auto dealer bond, the surety is agreeing to extend the principal sufficient credit to cover claims so that claimants are paid promptly. It also allows the principal to repay the surety in manageable installments instead of one large, daunting sum.
What Do They Cost?
The annual premium for a Missouri auto dealer bond is a small percentage of the bond’s $50,000 penal sum. The surety’s underwriter will assign a premium rate that reflects the relative risk to the surety of extending credit to the principal. A high credit score suggests a low level of risk and is rewarded with a low premium rate, usually in the range of 1-2%. With lesser credit, the premium rate could be higher.
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Our surety bond professionals will get you the Missouri auto dealer bond you need at a competitive rate.