In this article, we’ll walk you through everything you need to get a South Carolina car dealer license.
Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. Our expert agents are ready to assist with all your South Carolina car dealer license bond needs.
What Are the Different Types of South Carolina Car Dealer Licenses?
The South Carolina Department of Motor Vehicles issues the following types of dealer licenses:
- Motor vehicle dealer
- Motor vehicle wholesaler dealer
- Motor vehicle wholesaler auction dealer
- Motorcycle dealer
- Motorcycle wholesaler
- RV dealer
- Temporary RV dealer
This article focuses on getting licensed as a motor vehicle dealer retailing new and/or used vehicles.
What Are the Steps in the Licensing Process?
Before submitting an application for a South Carolina motor vehicle dealer license, you’ll need to:
- Register your business with the IRS to obtain a Federal Employer Identification Number.
- Register with the South Carolina Department of Revenue to obtain a sales tax number.
- Secure a permanent location for your dealership.
- Attend an approved pre-licensing course.
- Purchase liability insurance and, if you will have employees, Workers’ Compensation insurance as well.
- Obtain a Criminal History report from the South Carolina Law Enforcement Division.
- Purchase a South Carolina car dealer bond in the amount of $30,000.
Complete the application in its entirety and mail it, along with all supporting documents and payment of the required fee, to the South Carolina DMV, Dealer Licensing and Audit Unit in Blythewood. After your application has been processed, your dealership may need to pass a site inspection before your license will be sent to you.
Why is a South Carolina Car Dealer Bond Required?
When you purchase a South Carolina car dealer bond you are agreeing to abide by all applicable state laws and regulations governing motor vehicle sales within the state. The surety bond agreement is a legally binding contract among three parties: the state of South Carolina (the “obligee”), the dealer (the bond’s “principal”), and the company guaranteeing payment of claims (the “surety”).
The principal is legally obligated to pay valid claims filed by the obligee or by consumers for damages resulting from the principal’s failure to live up to the terms of the surety bond agreement. Thus, South Carolina car dealer bonds provide financial protection for the state and the public and help maintain consumer confidence in the vehicle sales industry.
How Are South Carolina Car Dealer Bond Claims Paid?
Although the principal is legally obligated to compensate those with legitimate claims against a South Carolina car dealer bond, the surety guarantees payment and wants to expedite resolution of valid claims. So the surety typically pays a claim initially, on the principal’s behalf, and then is repaid by the principal. If repayment is not forthcoming, the surety can take legal action against the principal.
How Much Does a South Carolina Car Dealer Bond Cost?
All three parties play a part in determining the annual premium for a South Carolina car dealer bond. The obligee has established $30,000 as the required bond amount, or “penal sum”—the maximum amount that will be paid out on any claim. The surety sets the premium rate for each bond on a case-by-case basis. And the principal’s own credit history is the main underwriting factor the surety will consider in doing that.
The surety’s primary concern is being repaid for claims paid on behalf of the principal and will take a close look at the principal’s personal credit score to assess the risk of non-repayment. A high credit score is indicative of a low level of risk, resulting in a low premium rate, typically in the range of one to two percent, for an annual premium of $300 to $600. The reverse is also true; a low credit score suggests greater risk and requires a higher premium rate.
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