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 Florida auto auction license bond needs. Learn how to obtain an auto auction license in Florida, below.
What Is a Florida Auto Auction License?
Florida issues several different types of auto dealer licenses, two of which permit selling vehicles at auction:
- Type VW allows a dealer to buy and sell vehicles on a wholesale basis or at auctions to both wholesalers and the public
- Type VA is for dealers buying and selling only at wholesale auctions.
What Are the Steps in the Licensing Process?
Here is a broad overview of the major steps in the licensing process:
- Meet pre-licensing education requirements.
- Find a business location that meets state requirements and get it inspected by the Division of Motorists Services Compliance examiner.
- Form and register your business with the Secretary of State, Division of Corporations.
- Obtain a Federal Employee Identification Number from the IRS and a sales tax number from the Florida Department of Revenue.
- Purchase a $25,000 Florida auto auction license bond.
- Complete the Florida Dealer License Application.
- Pay the required fee and submit the completed application and all other paperwork, including the surety bond to the Florida Department of Highway Safety and Motor Vehicles.
Why Is a Florida Auto Auction License Bond Required?
A Florida auto auction license bond guarantees that dealers who buy and sell motor vehicles at auction abide by all Florida statutes and rules governing auto sales and auto auctions. It protects the state against liability for any damages caused by an auto auction dealer’s unlawful or unethical actions and provides a way to compensate the injured party in such instances.
How Are Florida Auto Auction License Bond Claims Paid?
When a claim is filed against a Florida auto auction license, the surety company (the “surety” for short) will investigate to make sure that it’s valid before approving it for payment. Then, although the terms of the surety bond agreement indemnify both the surety and the State of Florida (the bond’s “obligee”) against any responsibility for claims and legally obligates the dealer (the bond’s “principal”) to pay them, what happens in practice is a little different.
Typically, the surety will pay a valid claim on behalf of the principal. That payment is essentially a loan to the principal because it creates a debt that the principal must repay in full. It’s an arrangement that benefits the claimant, who is paid promptly, and the principal, who gains some time to come up with the money to reimburse the surety instead of having to pay a potentially large sum all at once.
How Much Does a Florida Auto Auction License Bond Cost?
The surety establishes the premium rate for a given bond based on its assessment of the risk of extending credit to the principal for the payment of claims. A principal with a high personal credit score could pay a premium that is as little as one percent of the $25,000 bond amount, while the rate for someone with credit challenges may be much higher.
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