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 car dealer bond needs.
Learn how to get a Nevada car dealer license and contact us today to request a quote on the bond you need.
What Are the Different Types of Nevada Vehicle Dealer Licenses?
The Nevada Department of Motor Vehicles (DMV), Occupational and Business Licensing section issues nearly a dozen different types of dealer licenses, including licenses for manufacturers, rebuilders, brokers, and so on, as well as for dealers selling new and/or used vehicles.
This article focuses on the requirements and process for obtaining a license as a used car dealer, which is the most common of all Nevada dealer licenses.
What Are the Steps in the Licensing Process?
These are the major steps in obtaining a used car dealer license in Nevada. Detailed instructions are provided in the application packet.
- Register your business entity with the Secretary of State and get a Nevada tax ID number.
- Obtain a city or county business license.
- Secure a permanent business location that meets local zoning requirements.
- Get fingerprinted by an authorized DMV representative or a law enforcement agency.
- If you will not be providing repair services on the dealership premises, you must enter into an agreement with a repair facility that meets state requirements.
- Purchase liability insurance and, if you will have employees, Workers’ Compensation insurance.
- Purchase a Nevada car dealer bond in the amount of $100,000.
- Fill out the application in its entirety and submit it along with all supporting documents and payment of the fingerprint processing fee (currently $40.25) and new license fee (currently $125).
Why is a Nevada Car Dealer Bond Required?
A Nevada car dealer bond is a dealer’s pledge to do business in a lawful and ethical manner, in compliance with all statutes and recommendations governing vehicle sales in the state. In the event that the dealer (known as the bond’s “principal”) violates the terms of the surety bond agreement, financially harming the state or a consumer, the injured party can file a claim for damages against the bond and be compensated for the loss.
How Are Nevada Car Dealer Bond Claims Paid?
There are two other parties to a Nevada car dealer bond in addition to the principal: the “obligee” requiring the bond (the state of Nevada) and the surety, the company guaranteeing the payment of claims. Although the surety bond agreement, which is a legally binding contract, makes the principal legally responsible for paying claims, the surety guarantees payment, and therefore will pay a valid claim initially, on the principal’s behalf. The principal’s obligation then shifts to repaying the surety.
How Much Does a Nevada Car Dealer Bond Cost?
Fortunately for the principal, the annual premium is only a small percentage of the required $100,000 bond amount. What that percentage, the premium rate, will be depends on the underwriters’ assessment of the risk that the principal won’t readily reimburse the surety for claims paid on behalf of the principal. The best measure of that risk is the principal’s personal credit score, although other factors also enter into the picture.
With a high credit score, the risk is considered low, and your premium rate will be low as well, typically in the range of one to three percent. You’ll pay a higher premium rate if your credit history is not as good. The difference in the annual premium could be thousands of dollars.
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