New York Motor Vehicle 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 of your New York motor vehicle dealer bond needs.
What Are They?
A New York motor vehicle dealer bond is the state’s way of protecting itself and consumers against financial loss stemming from the unlawful or unethical actions of motor vehicle dealers operating in New York. Specifically, the bond serves as a motor vehicle dealer’s guarantee to do business in compliance with applicable portions of New York’s Vehicle and Traffic Law.
Because such bonds are required as a condition for becoming licensed as a New York motor vehicle dealer, they are categorized as a type of license and permit bond.
Who Needs Them?
Both new and used motor vehicle dealers must purchase a New York motor vehicle bond that allows them to do business in the state. The required amount of the bond depends on whether the dealer sells new or used vehicles. The number of vehicles sold during the previous calendar year will also be used to determine the bond amount for those who sell used vehicles.
The required bond amounts include the following:
- For a dealer selling used motor vehicles, retail or wholesale, with previous year’s sales of 50 or fewer vehicles—$20,000
- For a dealer selling used motor vehicles, retail or wholesale, with previous year’s sales of more than 50 vehicles—$100,000
- For any dealer selling new vehicles, regardless of quantity—$50,000
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A New York motor vehicle bond agreement forms a legally binding agreement among three parties:
- The New York Department of Motor Vehicles is the “obligee” requiring the purchase of the bond.
- The motor vehicle dealer is the “principal” required to purchase the bond.
- The agency underwriting and issuing the bond is the “surety.”
Any violation of the terms of the surety bond agreement that causes a financial loss gives the injured party the right to file a claim against the principal’s New York motor vehicle dealer bond. The surety will investigate to determine whether the claim is valid. If it is, and no settlement can be negotiated, the surety will go ahead and pay the claim and then collect reimbursement from the principal.
By paying the claim upfront, the surety is extending a line of credit to the principal and ensures timely payment of the claim. It also gives the principal some time to gather the necessary funds. The principal can often repay the surety in installments.
What Do They Cost?
Motor vehicle surety bonds go through underwriting, so the cost of a bond may vary depending on how risky the surety thinks it is to extend credit to a given principal. A high personal credit score is rewarded with a low premium rate, and vice versa. Someone with poor credit should be able to purchase a New York motor vehicle dealer bond, but will pay a higher premium rate.
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You can count on our surety bond professionals to get you the New York motor vehicle dealer bond you need.