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 North Dakota auto dealer bond needs.
What Are They?
Auto dealer bonds exist because of the potential for the actions of a less-than-ethical dealer to cause financial harm to a consumer, or to the state itself. A North Dakota auto dealer bonds serves two main purposes:
- They help uphold the integrity of the state’s motor vehicle sales industry by requiring licensed dealers to operate in full compliance with applicable laws and regulations.
- They also provide a way for those who do incur a financial loss because of a dealer’s unlawful business practices to recover damages.
Violations such as tampering with odometers, fraudulently altering motor vehicle titles, deliberately misleading consumers as to a vehicle’s condition, or failing to remit taxes to the state can result in the injured party filing a claim against the pond and being compensated for their loss.
Who Needs Them?
The North Dakota Department of Transportation, Motor Vehicle Division (MVD) issues several classes of dealer licenses, differentiated by the types of vehicles sold. Purchasing a North Dakota auto dealer bond is a prerequisite for obtaining any type of dealer license. Dealers selling cars, trucks, and motorcycles, must purchase a $25,000 bond, but the required bond amount for dealers selling trailers, and recreational vehicles like ATVs, UTVs, and snowmobiles0is only $10,500.
Although the term of a North Dakota vehicle dealer’s license is one year, dealers can purchase a multiple-year bond. The expiration dates of the license and the bond need not coincide as long as there is always an active bond in force.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
Every North Dakota auto dealer bond is a legally binding contract that involves three parties commonly referred to as:
- The “obligee,” which is the party requiring the bond—the North Dakota MVD,
- The “principal,” the party required to purchase the bond and legally obligated to pay any valid claims against it, and
- The “surety,” the party guaranteeing the payment of claims.
Although the surety bond agreement legally obligates the principal to pay all valid claims, the surety has guaranteed the payment of claims and therefore will pay a claim initially and then is repaid by the principal for the resulting debt. The surety can take legal action against a principal who fails to repay that debt, which could end up with the principal having to pay court costs and legal fees in addition to the amount paid out on the claim.
What Do They Cost?
The annual premium for a North Dakota auto dealer bond can be lower than you might think—a little as one percent of the required bond amount if you have a great credit history. That’s because the main underwriting concern is the risk that the principal won’t repay the surety for claims paid on the principal’s behalf.
A person with excellent credit as indicated by a very high personal credit score presents very little risk to the surety and deserves a very low premium rate. Of course, the reverse is also true, so a person with a low credit score, who poses a much greater risk to the surety, will be assigned a much higher premium rate, perhaps three percent or more.
Get a Quote
Our surety bond professionals will get you the North Dakota auto dealer bond you need at a competitive rate.