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 New Jersey car dealer bond needs.
Learn how to get a New Jersey car dealer license and contact us today to request a quote on the bond you need.
What Are the Different Types of New Jersey Car Dealer Licenses?
The New Jersey Motor Vehicle Commission (MVC) issues licenses to dealers selling new and used cars, used cars only, or boats, as well as licenses for leasing dealerships. Our focus here is on the licensing of used car dealers.
What Are the Steps in the Licensing Process?
The following is an overview of the major steps in the licensing process. For more detailed information, refer to the checklist that accompanies the initial license application that you’ll need to download and fill out in its entirety.
- Establish a business entity and register it with the IRS to obtain an Employer Identification Number.
- Register the dealership with the state of New Jersey and obtain a New Jersey Sales Tax Certificate.
- Secure a permanent business location and obtain local zoning approval.
- Have your fingerprints scanned and undergo a criminal background check
- Submit your completed application and all supporting documentation to MVC, Business Licensing Services Bureau, in Trenton.
After you receive preliminary approval of your application, you’ll need to:
- Provide proof of liability insurance.
- Submit a New Jersey car dealer bond in the amount of $10,000.
Why is a New Jersey Car Dealer Bond Required?
New Jersey requires dealers to purchase a car dealer bond in order to become licensed initially and maintain an active bond in force at all times to keep their license in good standing. In purchasing the bond, the dealer (the bond’s “principal”) is guaranteeing full compliance with all applicable New Jersey statutes and regulations. This provides financial protection for both the state (the “obligee” requiring the bond) and the car-buying public.
Any violation by the dealer that causes a financial loss to the state (e.g., failure to pay taxes, fees, or fines) or a consumer (e.g., tampering with a vehicle’s odometer or misrepresenting the condition of a vehicle) gives the injured party the right to file a claim for damages. If the “surety” (the company guaranteeing the bond) finds a claim to be valid, the principal is legally obligated to pay it.
How Are New Jersey Car Dealer Bond Claims Paid?
Despite the principal’s legal obligation to pay all valid claims, typically the surety will pay a claim initially to ensure prompt resolution of the matter. The principal’s obligation then becomes the obligation to repay the surety for the debt resulting from that initial payment. Although the surety guarantees the payment of claims, it is indemnified against liability for them and can take legal action against the principal to secure repayment if necessary.
How Much Does a New Jersey Car Dealer Bond Cost?
The annual premium you’ll pay when purchasing a New Jersey car dealer bond is a small percentage of the required $10,000 bond amount. That percentage is the premium rate, which is set by the surety for each bond based on its assessment of the risk of not being repaid for claims paid on the principal’s behalf. The main factor considered is the principal’s personal credit history.
The logic is very simple—a high credit score suggests a low risk level and warrants a low premium rate. The reverse is true as well. A low credit score means higher risk and requires a higher premium rate. With good credit, your premium rate should be no higher than 3% and potentially as low as 1%, for an annual premium of between $100 and $300 for a $10,000 bond.
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Our surety bond professionals will get you the New Jersey car dealer bond you need at a competitive rate.