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 Nevada auto dealer bond needs.
What Are They?
Nevada requires all motor vehicle dealers to be licensed by the state’s Department of Motor Vehicles, and purchasing an auto dealer bond is a mandatory step in the licensing process. Consequently, Nevada auto dealer bonds are classified as a type of license and permit surety bond—no bond, no license.
Nevada auto dealer bonds provide a measure of assurance that dealers will do business in compliance with applicable state laws. Specifically, auto dealer bonds protect the state against liability for having issued a license to a dealer whose unlawful business practices cause consumers financial harm. Nevada auto dealer bonds also provide a way to compensate consumers who experience a financial loss due to the actions of a licensed auto dealer.
Who Needs Them?
Anyone seeking to obtain a new auto dealer license or renew an existing license in Nevada must first purchase a Nevada auto dealer bond in the amount required by DMV. Different bond amounts are required for different types of dealers:
- For dealers who sell cars and trucks, the bond amount is $100,000.
- For dealers selling motorcycles and larger trailers, the bond amount is $50,000.
- For dealers selling smaller utility and boat trailers, the bond amount is $10,000.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The surety bond agreement for a Nevada auto dealer bond is a legally binding contract between:
- The Nevada DMV which requires the bond is known as the “obligee.”
- The auto dealer required to purchase the bond is referred to as the “principal.”
- The bonding company underwriting and approving the bond is called the “surety.”
The terms of the surety bond agreement identify the statutes that the principal must abide by in order to avoid claims against the bond. Committing an infraction such as turning back a vehicle’s odometer or failing to transfer a vehicle’s title properly can result in claims against a Nevada auto dealer’s bond by any party who is harmed financially by the violation.
Upon receipt of a claim, the surety will investigate it to make sure it’s valid, and then typically pays the claim on behalf of the principal. In effect, the surety lends the principal the money to cover a claim, creating a debt that the principal must repay because the legal responsibility for paying claims belongs solely to the principal. This arrangement benefits the claimant, who is paid promptly, and the principal, who can repay the surety in manageable installments.
What Do They Cost?
Issuing a Nevada auto dealer bond exposes the surety to the risk that the principal won’t repay the surety for claims paid on the principal’s behalf. Therefore, the surety bases the premium rate for a given auto dealer bond largely on the principal’s personal credit score, also taking into account the individual’s business financial stability and any history of prior claims.
With good credit, the annual premium for a Nevada auto dealer bond should be no more than 1% to 3% of the required bond amount.
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Our surety bond professionals will get you the Nevada auto dealer bond you need at a competitive rate.