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 New Mexico car dealer bond needs.
Learn how to get a New Mexico car dealer license and contact us today to request a quote on the bond you need.
What Are the Different Types of New Mexico Car Dealer Licenses?
The New Mexico Department of Motor Vehicles (DMV) issues vehicle dealer licenses to retail dealers, wholesale dealers, manufacturers, distributors, and dismantlers. This article provides guidelines for obtaining a retail dealer license.
What Are the Steps in the Licensing Process?
There’s a lot of legwork to be done before submitting an application for a retail car dealer license in New Mexico, including:
- Forming a business entity and registering it with the IRS to get a Federal Employer Identification number (FEIN) and with the New Mexico Taxation and Revenue Department to obtain your CRS (Combined Reporting System) number.
- Establish a permanent business location that meets state requirements for retail dealerships and have it inspected by the local zoning authority.
- Register the dealership with local authorities.
- Purchase a $50,000 New Mexico car dealer bond.
- Pass a pre-licensing education class conducted by the New Mexico Independent Auto Dealers Association.
You can apply online and upload scanned documents or fill out a paper application and submit it, along with the required supporting documents, to MVD in Santa Fe. The application fee currently is $50.
Why is a New Mexico Car Dealer Bond Required?
The purpose of the New Mexico car dealer bond required by the state’s DMV (the bond’s “obligee”) is to provide financial protection for both the state and the public. First and foremost, the terms of the surety bond agreement require the dealer (the bond’s “principal”) to operate in compliance with the laws and regulations governing New Mexico’s retail vehicle trade. That includes paying taxes, fees, and any fines imposed by MVD and refraining from any unethical business practices that could result in financial harm to a customer.
Any violation by the dealer that does cause a financial loss gives the injured party the right to file a claim against the dealer’s New Mexico car dealer bond. The bond, which is a legally binding contract among the obligee, the principal, and the company guaranteeing the bond (the bond’s “surety”), provides a way to compensate claimants for their losses.
How Are New Mexico Car Dealer Bond Claims Paid?
Upon receipt of a claim, the surety will investigate it and determine whether it is valid and must be paid. Then, unless the principal, who is legally obligated to pay all valid claims, does so right away, the surety will honor its guarantee by paying the claim on behalf of the principal. However, the surety is indemnified against any legal liability for claims, and the principal’s obligation now becomes an obligation to repay the surety for the amount paid to the claimant. If the debt to the surety is not repaid within a reasonable period of time, the surety can take legal action against the principal.
How Much Does a New Mexico Car Dealer Bond Cost?
The annual premium for a New Mexico car dealer bond is determined in large part by the surety’s evaluation of the risk of not being reimbursed for claims paid on behalf of the principal. The underwriters will take a close look at the principal’s credit history to see how responsible the principal has been about paying debts in the past.
With a high credit score, the surety will consider the principal a low credit risk and assign an appropriately low premium rate, usually in the range of one to three percent. That would make the annual premium for the $50,000 bond somewhere between $500 and $1,500. Lesser credit suggests a higher risk to the surety and will result in a higher premium rate.
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