An auto dealer bond protects customers from fraud or misrepresentation during a business transaction. If a car dealer does not follow rules and regulations, someone can make a claim on your bond.
Not sure if you need to get licensed? Check out this post on selling cars without a license.
How Much Does an Auto Dealer Bond Cost?
Like all surety bonds, Auto Dealer Bonds vary in price. There are 3 main factors that play into the cost of an Auto Dealer Bond. They are as follows:
Price Factor #1: Bond Amount
Your Auto Dealer Bond cost depends on your entire bond amount.
You will pay a portion of the entire bond amount, so a portion of a $100,000 Auto Dealer Bond will always be more than a portion of a $5,000 Auto Dealer Bond.
This is because the surety company is on the hook for bigger claims with larger bond amounts, and therefore must charge a higher rate.
Not sure what your bond amount should be? Use this interactive tool:
Price Factor #2: Credit History
Your Auto Dealer Bond cost is based largely on your personal credit score.
Those with good credit scores (700 or higher) will generally pay 1-4% of their total bond amount.
Those with a credit score under 650 will generally pay between 5-20% of the total bond amount.
Prices only need to be paid once, until the bond needs to be renewed. You do not need to pay for your bond every month.
So how much do you pay?*
- $50,000 dealer bond with good credit: You pay $500 – $1500
- $50,000 dealer bond with bad credit: You pay $2000 – $7500
The payments are one-time payments, not monthly. You can learn more about how often you pay for your bond.
Curious what you would pay for your Auto Dealer Bond? Get a free quote:
Have bad credit? It’s okay. Get a bad credit quote.
*all approximations are just that, approximations not guaranteed final prices. There are simply too many variables to offer a final definitive surety bond price without accounting for the specific risk of an individual applicant.
Price Factor #3: History of Losses
Some surety bonds have bigger historic losses than others. Surety companies take this into account when arriving at the cost of your Auto Dealer Bond.
If a bond has very minimal losses, sureties will often “instant issue” these because they have no concern about bond losses coming back to bite them.
On the other hand, if a particular bond type in a given state consistently posts significant losses the Surety must charge more premium for this bond type in order to off-set their losses.
Find Our Your Auto Dealer Bond Cost:
Since there are a lot of expenses that come with opening up your own car dealership, the best way to save money on expenses is to save on the Auto Dealer Bond Cost.
At Surety Solutions, we let you view free quotes for your bond so you can compare prices before you buy. We have relationships with over 30 of the top insurance carriers in the nation and can get you bonded at the lowest end of the spectrum.
Curious to see what your Auto Dealer Bond cost would be? Get your free quotes below:
Then view our free ebook for more money-saving tips when opening up your own dealership: