Rhode Island Auto 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 Rhode Island auto dealer bond needs.
What Are They?
Rhode Island auto dealer bonds help enforce the state’s dealer licensing laws by serving as a guarantee that licensed dealers operate in accordance with the laws regulating the Rhode Island car trading industry. Any failure to live up to that guarantee that causes the state or a consumer to incur a financial loss can result in a claim for damages, which the dealer is legally obligated to pay if found to be valid.
Who Needs Them?
The Rhode Island Department of Revenue, Division of Motor Vehicles (DMV), issues licenses in three classes: used vehicle sales, new vehicle sales, and the sale of both new and used vehicles. Applicants for any of these licenses (new or renewal) must furnish a $50,000 Rhode Island car dealer bond which is good for one year, expiring on December 31. Unless there is an active bond in force at all times, a dealer’s license may be subject to revocation.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A Rhode Island car dealer bond is legally binding on all three parties to the surety bond agreement:
- The Rhode Island DMV, the bond’s “obligee,”
- The dealer, the bond’s “principal,” and
- The bond’s guarantor, known as the “surety.”
Suppose that a dealer conceals from a purchaser the fact that a vehicle was previously submerged in floodwaters, or falsified an odometer reading, and the consumer subsequently incurs a financial loss. The purchaser files a claim for damages, and the surety’s investigation determines that the claim is valid and must be paid.
The terms of the Rhode Island dealer bond legally obligates the principal to pay the claim, but as the bond’s guarantor, the surety pays it initially. This doesn’t eliminate the principal’s obligation, it merely shifts it to repayment of the surety. Failure to repay the debt can result in the surety taking legal action against the principal.
What Do They Cost?
The primary underwriting concern in determining what premium rate a given principal will pay is the risk of the surety not being repaid for claims paid on the principal’s behalf. The best measure of that risk is how responsible the principal has been in paying bills and managing credit in the past, as indicated by the principal’s personal credit score.
A high credit score is a strong indication of a low risk to the surety, which earns the principal a low premium rate, possibly around one percent. The reverse is also the case; a low credit score suggests a high risk to the surety and warrants a high premium rate, conceivably three percent or more.
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Our surety bond professionals will get you the Rhode Island auto dealer bond you need at a competitive rate.