Alaska Auto Dealer Bonds Explained
The state jurisdiction in most states across the country requires motor vehicle dealers to obtain a license as a way of regulating their business. An essential part of the dealer licensing process in Alaska is posting an auto dealer surety bond.
The surety bond is a contractual agreement signed between three parties: a principal, an obligee and a surety. In the case of the Alaska auto dealer bond these parties are: the auto dealer, the State of Alaska Division of Motor Vehicles and a surety bonds company.
The Alaska auto dealer bond protects any person who suffers damage as a result of unlawful business practices on the part of the dealer. It’s a safety measure that ensures the dealers will follow all state regulations and will not violate the provisions of AS 08.66. If the dealer fails to comply with the law and breaks the agreement, the surety will compensate the state or the customer, depending on the case.
Questions about Surety Bonds in Alaska
Who needs to obtain this bond?
New or used motor vehicles dealers, as well as buyer’s agents in Alaska, are required to obtain a bond as part of their licensing application. They will need to submit an original, notarized surety bond to the DMV. The bond must be in force at all times while you conduct your business in Alaska.
The bond amount is $50,000 for new and used vehicles dealers and $25,000 for dealers, planning on selling only motorcycles. Note that boat dealers are not required to be bonded.
State of Alaska
Division of Motor Vehicles
1300 W Benson Boulevard, STE 300
Anchorage, Alaska 99503-3696
Telephone: (907) 269-3755
How much does the bond cost?
New and used motor vehicles dealers need to post a $50,000 bond. If you are looking to sell only motorcycles, you need a $25,000 bond. These amounts, however, are not what dealers are required to pay in order to get bonded.
The premiums to be paid once every two years are a fraction of the whole amount, a percentage usually between 1% and 3%. The final price of your bond depends on a number of factors, your personal credit score being the most important one. Here’s an example of how to roughly estimate your bonding cost, based on your credit score.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|New and Used Vehicle Dealers||$50,000||$375-$750||$500-$1,500||$1,250-$,2500||$2,500-$5,000|
Are there any bad credit bonds options?
With Lance Surety Bonds even clients who have a bad or no credit score can get an bonded. Our Bad Credit Program is designed to help dealers with problematic financial backgrounds get the bond they need.
The premium amount will be in the range of 5%-10%. The rates are slightly raised to compensate for the increased bonding risk when it comes to clients with low credit. However, as Lance Surety Bonds works with a number of established A-rated, T-listed surety companies, your best quote and top price are still guaranteed.
How do I apply for an Alaska auto dealer bond?
Simply use our online application to submit your request and we will contact you back with your free quote within minutes.
If you have further questions on the bonding process, you can call our surety bonds experts at (877) 514-5146. They are well-acquainted with the Alaska bonding requirements and they’re here to assist you with any difficulties you might encounter.
Want to know more about the dealer bonds? Visit our “How to Get Bonded” page to learn more information on the process of obtaining an auto dealer bond.
When do I have to renew my bond?
The Alaska auto dealer license is valid for two years after registered. Upon expiry of your license, you are required to renew your auto dealer bond as well. So you must renew your bond every two years, for as long as your business is operating.
What if I get a bond claim?
Do your best to avoid claims as they are not only quite costly but will also affect your future credibility. As the bond is designed to protect your customers and the state, any fraudulent activity you might engage in could lead to a claim filed against you.
If the claim is valid, you may be ordered to pay up to $50,000 in compensation. If a dispute takes place, usually it’s easiest and cheapest to look for a settlement outside of court.