South Carolina 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 South Carolina auto dealer bond needs.
What Are They?
South Carolina auto dealer bonds serve two key purposes in maintaining an orderly motor vehicle trade. First, they require licensed motor vehicle dealers to comply with all applicable state laws and regulations. They also provide a way for those experiencing a financial loss—due to a dealer’s violation of the terms of the surety bond— to recover damages.
Who Needs Them?
The South Carolina Department of Motor Vehicles (DMV) licenses motor vehicle dealers to operate within the state, and purchasing an auto dealer bond is a prerequisite for licensure. For wholesale dealers selling motor vehicles, and motorcycle dealers, and wholesalers, the required bond amount is $15,000. But for new and used auto dealers and wholesalers, as well as retailers and wholesalers of recreational vehicles, it’s $30,000. If the bond is not renewed at every expiration date, the 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?
DMV and the dealer, known as the bond’s “obligee” and “principal” respectively, are two of the parties to the legally binding surety bond agreement. The third party is the bond’s guarantor, referred to as the “surety.” Let’s say that the principal commits a legal infraction, such as fraudulently altering a vehicle title, and causes the purchaser to incur a financial loss. The customer has the right to seek monetary damages by filing a claim against the auto dealer bond.
If the surety determines the claim is legitimate, it must be paid. The legal obligation to pay valid claims rests entirely with the principal; but the surety has guaranteed the payment of claims. Therefore, the surety will pay the claim initially and then be reimbursed by the principal for the claim amount. The surety can take the principal to court if that repayment is not forthcoming.
What Do They Cost?
South Carolina auto dealer bonds are sold for an annual premium. That is calculated by multiplying the $15,000 or $30,000 bond amount, by the premium rate, the surety assigns the bond applicant. The premium rate will reflect the underwriters’ assessment of how much risk there is of the principal not reimbursing the surety; for claims paid on the principal’s behalf. That risk is based in a large part on the principal’s personal credit score. The higher the credit score, the lower the risk to the surety.
The premium rate can be less than one percent for a principal with great credit, but poor credit can result in a premium rate of three percent or more.
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Our surety bond professionals will get you the South Carolina auto dealer bond you need at a competitive rate.