Colorado Auto Dealer Bonds Explained
Dealers in almost every state are required to post a type of surety bond, known as an auto dealer bond, in order to get licensed. The purpose of auto dealer bonds is to safeguard consumers against fraud and to ensure that certain industry standards are upheld.
More specifically, Colorado auto dealer bonds require that all dealers comply with the provision in the Colorado Revised Statutes. Failure to do so can be punished with a bond claim. A valid bond claim would mean that the dealer needs to reimburse the claimant for the losses incurred.
Here’s some more information about the bonding requirement:
Bond Name: Colorado Auto Dealer Bond
Bond Amount: $50,000
Colorado Department of Revenue
Auto Industry Division
1881 Pierce St., #112
Lakewood, CO 80214
Expiration Date: Yearly renewal
If you’re ready to apply, you can begin our straightforward online application process now, or consult the Questions sections below for useful information and tips on getting bonded.
If you need any assistance or clarification, simply call us at (877)-514-5146 and tell us how we can help.
Questions about Surety Bonds in Colorado
- Who needs to post a Colorado auto dealer bond?
- How much does a Colorado auto dealer bond cost?
- Can I get bonded with bad credit?
- How do I apply for a Colorado auto dealer bond?
- How do I renew my Colorado auto dealer bond?
- How do I get a Colorado dealer license?
- How are bond claims handled for auto dealer bonds?
Who needs to post a Colorado auto dealer bond?
Dealer bonds are a prerequisite for the licensing process for all dealers in the state. This includes new and used-car dealers, as well as wholesalers, wholesale auctioneers, and dealers of powersports vehicles.
How much does a Colorado auto dealer bond cost?
The exact premium you will have to pay will be determined by the surety bond company which underwrites your bond. Because sureties assume legal and financial risk for your actions, they will want to evaluate your finances and credit report, to assess the risk they undertake by underwriting your bond.
If you have a good credit score, your premium will likely not exceed 2.5% of the total amount required, which is $50,000. Here’s an estimation of your likely premium, based on your credit score.
|Auto Dealer Bond Cost by Credit Score|
|Surety Bond Name||Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Colorado Auto Dealer Bond||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$3,500|
Keep in mind that besides the information in your credit report, sureties can evaluate other factors as well if you submit them. Such factors can include your resume demonstrating your auto dealer experience, or financial statements showing liquid assets, for example.
You can find useful tips on our What Does a Surety Bond Cost? page if you want to learn more about how your premium is determined.
Can I get bonded with bad credit?
An applicant with bad credit would mean a higher risk for the surety, which is why bonding is not always easy if you have a spotty credit report.
This is why we have our bad credit surety bonds program, through which we can help 99% of Colorado dealers get bonded. Premiums generally vary between 2.5% and 10%. Our experts always make sure they provide specific advice on how you can reduce your cost as much as possible.
How do I apply for a Colorado auto dealer bond?
The dealer bond application is straightforward and worry-free. Our online application takes just a few minutes to complete. After submission, we’ll contact you with your free bond quote.
The bonding process requires that you sign an indemnity agreement with the bonding company. After finalizing all paperwork and processing your payment, we do our best to get your bond issued in a few business days.
How do I renew my Colorado auto dealer bond?
Bond renewal generally takes even less time than the initial application. We send out reminders to all our clients, so you never have to worry about missing a deadline.
Colorado licenses and dealer bonds need to be renewed annually to remain active. Your bond renewal quote will rarely vary from year to year, unless there is a significant change in your credit report, credit score, or other cost-determining factors.
How do I get a Colorado dealer license?
The licensing process will vary depending on what type of dealer license you wish to obtain. Besides your original bond form, you will also have to submit some additional documentation, such as:
- A business plan
- Photographs of your business premises
- Education certificate
- Sales tax license
- Application form
- Applicable fees
Be sure to check all other requirements pertaining to your type of license at the website of the Colorado Department of Revenue.
How are bond claims handled for auto dealer bonds?
A bond claim can be filed against a dealer who is in violation of the Colorado Revised Statutes, or has used fraudulent or unethical business practices.
The best course of action when you face a dispute is to resolve it out of court. If this isn’t possible, you will have to build a strong case. If there is sufficient proof that you are not guilty, you can alert the surety which can provide legal assistance. If the bond is proven, however, you have to reimburse the claimant up to a sum not exceeding $50,000, depending on the type of violation.
In general, if you operate your business legally and responsibly, there shouldn’t be any reason to worry about bond claims. It’s important to be up-to-date with all regulatory changes that might affect you, and to always train your staff well.