Vermont 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 Vermont auto dealer bond needs.
What Are They?
Vermont auto dealer bonds provide financial protection for the state and the public by:
- Requiring licensed auto dealers to comply with the applicable Vermont statutes and conduct business in a completely lawful and ethical manner, and
- Providing a way to compensate the injured party or parties in the event that the dealer commits a violation that results in their financial harm.
Thus, auto dealer bonds play an important part in regulating and maintaining consumer confidence in Vermont’s auto trading industry.
Who Needs Them?
Everyone applying to the Vermont Commissioner of Motor Vehicles (CMV) for an initial auto dealer license or renewing an existing license must purchase a Vermont auto dealer bond.
The required bond amount varies according to the number of vehicles sold in the previous two years, beginning at $20,000 for dealers with less than 25 vehicle sales during that period and increasing in $5,000 increments to a maximum of $35,000 for dealers with more than 250 sales. New dealers applying for their initial license must purchase a $35,000 bond.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A Vermont auto dealer bond is a legally binding contract that brings together a dealer, referred to as the bond’s “principal,” with two other parties: CMV (the bond’s “obligee”) and the bond’s guarantor (referred to as the “surety”).
The principal’s violation of any of the terms of the surety bond agreement that causes the obligee or a consumer to incur a financial loss can result in the injured party filing a claim against the bond and receiving compensation. For example, the obligee might file a claim to recover unpaid taxes or fees from the principal. A consumer experiencing a loss because the principal committed an act of fraud (e.g., altering a vehicle’s title, misrepresenting the vehicle’s condition, or falsifying the odometer reading), also might have the basis for a claim.
The surety will determine whether a claim is valid and should be paid. The principal bears the full legal obligation to pay valid claims. But as the bond’s guarantor, the surety typically will pay a claim initially, to be repaid later by the principal. The surety can take legal action against a principal for failing to repay that debt.
What Do They Cost?
Vermont auto dealer bonds are subject to underwriting. The main underwriting concern is the risk that the principal might not be willing or able to repay the debt caused by the surety’s payment of a claim on behalf of the principal. The underwriters’ assessment of that risk will determine the premium rate you will pay for your bond. Their assessment will be based largely on your personal credit history.
If you have been responsible with managing credit in the past, you’re likely to continue to be creditworthy. A high credit score is taken as an indication that you present little risk to the surety, which should result in a low premium rate. The opposite is also true: a low credit score suggests a higher level of risk and warrants a higher premium rate. So, depending on your personal credit score, your premium rate could be anywhere from less than one percent to three percent.
Get a Quote
Our surety bond professionals will get you the Vermont auto dealer bond you need at a competitive rate.