Auto Broker Bonds Explained
If you want to engage in the assisting or arranging of purchases for car buyers in the state of New York, you have to get licensed as an auto broker. This entails that you post an auto broker bond.
The purpose of the auto broker bond is to guarantee that you will adhere to the laws in the state of New York in your operations. It protects your customers from potential illegal activities on your side.
The surety bond works a contract between three parties. The principal is your brokering business that has to get bonded. The obligee is the New York Department of State. The third entity is the surety, which provides you with the bonding.
Questions about Auto Broker Bond
Who needs to obtain this bond?
You have to get a New York auto broker bond if you wish to operate as a car broker in the state. The bond is required by the Department of State (DoS) for obtaining a NY auto broker license. It serves as a guarantee that you will follow all applicable laws.
The licensing process for auto brokers is handled by the state Department of Motor Vehicles (DMV). During the application process, you have to provide a number of other documents, in addition to providing the bond to the DoS.
The auto broker bond is currently required only in the state of New York.
How much does the bonding cost?
Auto brokers in New York have to provide a $100,000 surety bond. The surety bond cost that you have to pay is a small percentage of this required amount. It is referred to as the bond premium.
The factors that affect the cost include your personal credit score, business finances, and any fixed and liquid assets that you showcase. The stronger these indicators are, the lower the perceived risk of providing you with a bond is. If your finances are strong, the typical rates that you may get are between 0.75% to 5% of the bond amount.
Can I get bonded with bad credit?
It is more difficult to obtain an auto broker bond if you are struggling with financial issues.
We run our Bad Credit Surety Bonds program to offer a bonding option for applicants like you. If you are facing low credit scores, tax liens, bankruptcies, and civil judgments, you can benefit from it.
The bad credit bonding rates are usually between 5% and 10%, as the bonding risk is higher.
How do I get bonded?
The first step you should take is to complete our online application form (it takes 5min). You have to attach all supporting documents. We will contact you with a quote soon after. If you’re satisfied with it, you can get bonded straight away. We will send you a copy of your auto broker bond both online and on paper.
For further information about the bonding process, you can consult our detailed How to Get Bonded page.
Have more questions about auto broker bonds? Don’t hesitate to contact us at (877) 514-5146.
How are bond claims handled?
Auto broker bonds protect your customers, and not your business.
If you fail to follow the law in your operations, you can end up with a claim against your surety bond. This is how harmed parties can seek fair compensation for any damages.
The maximum penal sum of the bond is the amount that you have posted, which is $100,000 in this case. If the claim is proven, you are liable to cover all incurred costs and compensation.
As claims can be a serious threat for your business, the best approach is to avoid situations that can give rise to them.
Still Have Questions? Check Our FAQ Pages
What Our Clients Have To Say?
Kimberlee AblesQuick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!
Andrew PoincotLong story short, these guys cut through the B.S. and get the job done. Responsiveness, excellent! Communication, excellent! Respect for their industry partners, excellent! John, Collette, Ryan, you're all-stars! Thank you!
Margie MartinezWe decided for Lance Surety Bond's quote for 2 reasons; Price and Customer Service. Our Representative Ryan was just SUPERB!! [...] I highly recommend Lance Surety Bond for all your Bonding needs! I'll definitely come back for all of mine. :-) Thanks Ryan!