West Virginia Car Dealer License Guide

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In this article, we’ll walk you through everything you need to get a West Virginia 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 West Virginia car dealer license bond needs.

What Are the Different Types of West Virginia Car Dealer Licenses?

The West Virginia Division of Motor Vehicles (DMV) issues two types of car dealer licenses:

  • “D” licenses for motor vehicle dealers selling both new and used vehicles, and
  • “DUC” licenses permitting the sale of used vehicles only.

There are also licenses for dealers selling other types of vehicles, such as motorcycles and recreational vehicles.

The focus of this article is on the process for obtaining a DUC license.

What Are the Steps in the Licensing Process?

Before applying for a DUC license, you must register your dealership with the state and obtain a West Virginia business license.

The next step is to secure a permanent dealership location. Once you notify DMV’s Dealer Services Office of your intent to apply for a license, an inspector will be sent out to verify that your location meets all state requirements. If the site passes this pre-inspection, the inspector will give you the application package to complete.

To obtain the documents that must be submitted with your completed application, you’ll need to:

  • Purchase liability insurance in the required amounts
  • Purchase a $25,000 West Virginia car dealer bond
  • Obtain a personal property tax receipt or an affidavit from your county of residence showing that you are up-to-date on all taxes.

Complete the application and submit it to DMV Dealer Services, along with all required documents and payment of the license fee (currently $250) and any other applicable fees.

Why is a West Virginia Car Dealer Bond Required?

A West Virginia car dealer bond protects the state and the public against the financial consequences of a dealer’s unlawful or unethical business practices. The bond serves as a dealer’s pledge to operate within the confines of all applicable laws and regulations and obligates the dealer to compensate any party legitimately injured by the dealer’s violation of the surety bond agreement.

How Are West Virginia Car Dealer Bond Claims Paid?

It’s helpful to understand the terminology used to identify the three parties to the legally binding surety bond agreement for a West Virginia car dealer bond:

  • The “obligee” requiring the bond is the state of West Virginia,
  • The “principal” purchasing the bond is the dealer,
  • And the “surety” is the company guaranteeing the principal’s payment of valid claims

Although the obligation to pay claims rests only with the principal, in its role as guarantor, typically pays any valid claim on the principal’s behalf. But that does not eliminate the principal’s legal obligation.  The principal must subsequently repay the debt created by the surety’s payment to the claimant. Failing to live up to that obligation can result in the surety taking legal action against the principal to collect on the debt.

How Much Does a West Virginia Car Dealer Bond Cost?

West Virginia car dealer bonds are sold for an annual premium that is the product of multiplying the $25,000 required bond amount by the premium rate established by the surety on a case-by-case basis.  The surety’s biggest concern is being repaid for claims paid on the principal’s behalf, so the primary underwriting consideration is the principal’s creditworthiness. And the best measure of that is the principal’s personal credit score.

The risk entailed by extending credit to a bond applicant with a high credit score is low, which earns the principal a low premium rate, potentially as low as 1%. That would make the annual premium for a West Virginia car dealer bond only $250.

By the same token, a low credit score is a sign of a greater risk to the surety, which warrants a higher premium rate and an annual premium of up to $750.

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