What is a Kansas auto dealer bond?
Getting a Kansas auto dealer bond is one of the most important steps on your way to opening your car dealership in the state. The auto dealer bond is a type of surety bond, designed to safeguard your customers against potential fraud.
Like all surety bonds, the Kansas auto dealer bond represents an agreement between:
- Your dealership, called the principal
- The state, called the obligee
- A surety bond company, called the surety
This agreement, backed by the underwriter of the bond, guarantees that you will run your business in accordance with state and federal regulations or face legal action.
Here are the main things you need to know about the Kansas auto dealer bond:
Surety Bond Name: Kansas Motor Vehicle Dealer Bond
Surety Bond Amount: $30,000
Obligee: Kansas Department of Revenue
Division of Vehicles
Dealer Licensing Bureau
PO Box 2369
Topeka, KS 66601-2369
Expiration Date: December 31st of each year
You can apply directly for your bond by clicking on the Apply Now button on your right. Keep reading below for more detailed information about Kansas auto dealer bonds.
Questions about Auto Dealer Bonds in Kansas
- Who needs to obtain a Kansas auto dealer bond?
- How much does a Kansas auto dealer bond cost?
- Can I still get bonded if I have bad credit?
- How do I get a Kansas auto dealer bond?
- How do I renew my Kansas auto dealer bond?
- How do I get a Kansas dealer license?
- How are claims handled for Kansas auto dealer bonds?
Who needs to obtain a Kansas auto dealer bond?
It’s both used and new car dealers who need to provide proof of a valid auto dealer bond prior to getting licensed. However, there are a few exceptions for the following dealer types: Manufacturers, Distributors, Factory Branches, Lending Agencies, and Manufactured Home Dealers.
How much does a Kansas auto dealer bond cost?
The bonding amount for a Kansas auto dealer bond is $30,000, meaning that in case of a valid claim against you, you may be liable for up to $30,000.
To get your bond, or to renew it, you pay only a percentage of this amount, known as the bond premium. Your bond premium largely depends on your personal credit score. There are a few optional pieces of information you can submit to the surety bond company, which can favorably impact your premium. Such factors are, for example, your resumé, as well as your personal and business financial statements.
If your credit score is good, you are subject to standard market rates of between 1% and 3% of the total bond amount.
|Surety Bond Cost Based on Credit Score|
|Surety Bond Name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Kansas Motor Vehicle Dealer Bond||$30,000||$225-$450||$300-$900||$750-$1,500||$1,500-$3,000|
Can I still get bonded if I have bad credit?
Applicants with bad credit pose a higher risk to the surety bond underwriter. If the dealer triggers a claim, the surety is legally responsible for it too.
Sureties partially mitigate the risk of underwriting bad credit applicants by offering bonds at higher premiums, typically between 5% and 15%. Our experience shows that 99% of applicants managed to obtain their auto dealer bond despite credit issues.
If you feel like the premium you have to pay is too high, we advise you to check out some of the tips we have provided on our “What does a bond cost?” Page.
How do I get a Kansas auto dealer bond?
Even though your auto dealer bond is underwritten by a bonding company, you need to apply with a bonding agency to get it. Bonding agencies work with more than one surety bond company and can often find the best deal on your behalf.
How do I renew my Kansas auto dealer bond?
Regardless of when you surety bond was issued, it’s important to know that it expires on December 31st of each year and needs to be renewed. Failure to do so will cause your license to become invalid.
Lance Surety Bonds always make sure you keep within the deadlines, by sending reminders 30 to 90 days ahead of time. We will also send you a bond renewal quote. Once you agree to it, we will take care of the rest and make sure your bond is renewed. Talk to one of our surety experts if you wish to take steps to further reduce your renewal premium.
How do I get a Kansas dealer license?
Getting a car dealer license in Kansas requires a few actions. Your application should be complete, not only with an active auto dealer bond, but with all other required documentation.
You must have an established place of business, an active telephone, proper zoning, as well as a Sales Tax Registration number. If you have met all requirements, you will be notified that you also need to complete mandatory dealer training classes.
For a full list of Kansas dealer license requirements, contact the Kansas Department of Revenue or consult the information provided on their website.
How are claims handled for Kansas auto dealer bonds?
If you violate the terms of the surety bond agreement, you may be facing a claim. This is never a pleasant scenario, so from the start, you should take steps to minimize the damages. Try to reach an out-of-court settlement, as this will generally cost less and involve less hassle. If there is no way to avoid the claim, it’s in your best interest to document all interactions with the customer, so you have a solid defense.
To make sure you avoid claims to begin with, make sure you and your sales team are up-to-date with all state and federal laws and regulations.
Got more questions about Kansas auto dealer bonds? Call us at (877) 514-5146 or contact us via email. We will be happy to help!