Like they do in most states, Kentucky auto dealers need to get a Kentucky dealer license, so that they operate in compliance with the law. The Kentucky auto dealer bond is one of the main requirements for getting licensed.
The Kentucky Motor Vehicle Commission is the authority regulating the trade in the state. It asks for the bond in order to protect customers from fraudulent practices. In this sense, the auto dealer bond guarantees your business will comply with state regulations.
Just like other types of surety bonds, Kentucky auto dealer bonds function like a contract between three parties. Your dealership is the principal that has to post the bond. The obligee is the state Commission, and the surety is the entity that underwrites the bond.
- Surety Bond Name: Kentucky Auto Dealer Bond
- Surety Bond Amount:
- Minimum $15,000 auto dealer bond
- Obligee: Kentucky Motor Vehicle Commission
Carlos Cassady, Executive Director 105 Sea Hero Road, Suite 1
Frankfort, KY 40601
- Required Expiration Date of the Bond: Together with the license
An affected party can file a claim on your dealer bond if you do not follow state rules as signed in your bond. How are bond claims handled for auto dealers? Find out in the Questions section below.
Questions about Auto Dealer Bonds in Kentucky
How much does a Kentucky auto dealer bond cost?
Depending on the type of Kentucky auto dealer license that you need, you may be required to post a bond between $15,000 and $100,000. Auction dealers might need to post a larger amount, but this is decided on a case-by-case basis.
This surety bond amount might seem considerable, but in fact, this is not your surety bond cost. The amount is the maximum penal sum that can be repaid on proven claims against you.
Your bond price, called the bond premium, is only a fraction of the bond amount. In the usual case, it is between 1% and 3% if you qualify for the standard bonding market.
Thus, if you have to post a $15,000 Kentucky auto dealer bond, your bond premium may be as low as $150-$450.
The bond price for your particular case is decided after you fill in a complete bond application. Your surety then needs to take a close look at your personal and business finances. The most important factors it reviews include your personal credit score, assets and liquidity, financial stability, and business experience. If your finances are solid, you can expect a lower bond rate.
Our surety bond cost guide is a great starting point to understanding how your surety bond cost is determined.
|Surety Bond Cost Based on Credit Score|
|Surety Bond Name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Kentucky Auto Dealer Bond||Minimum Amount: $15,000||$125-$250||$150-$450||$375-$750||$750-$1,500|
|Maximum Amount: $100,000||$750-$1,500||$1,000-$3,000||$2,500-$5,000||$5,000-$7,500|
Can I get a Kentucky auto dealer bond with bad credit?
Getting the Kentucky auto dealer bond you need with problematic finances can be a tough ride. Here at Lance Surety Bonds, we have extensive experience with getting Kentucky auto dealers bonded. We proudly operate our Bad Credit Program to help applicants with low credit scores, past tax liens, civil judgments, or bankruptcies obtain the bond they need.
The typical bond premiums are between 5%-10%. The higher bond price is there to compensate for the higher financial risk involved in the bonding.
Still, you can always be sure that you are getting a great bonding rate with us. We foster close relations with top A-rated, T-listed surety companies. This means we can shop around for the best matching bond option for your specific case.
How do I get my Kentucky auto dealer bond?
The bonding process is as straightforward as it gets. You can apply online today for a free, no-obligations Kentucky auto dealer bond quote. Once you complete your full bond application, we will be able to assess the exact bond price too.
Getting bonded can be daunting at first, so if you have any questions, we are here to help. Just call us at (877) 514-5146. Our bonding specialists will be happy to assist you.
Need some reference reading? Our How to Get Bonded page is a great resources for all the facts on how bonding works.
How do I renew my Kentucky auto dealer bond?
Your Kentucky auto dealer bond needs to be in force while you are running your dealership. That’s the only way to be sure that you can keep your license. Whenever you renew your Kentucky dealer license, you also need to renew the bond.
Getting bonded with Lance Surety Bonds brings an important benefit. We will make sure you never miss a renewal deadline. We will send you a renewal reminder a few months in advance, so you have enough time to react. If needed, we will send you more reminders to ensure you don’t lose your license because of failure to renew your bond.
Your surety bond cost can fluctuate from year to year, because it is based on the current strength of your finances. This means that if you have the possibility to improve your credit score and other stats, you can expect to pay less the next time you renew your bond.
How do I get my Kentucky auto dealer license?
The Kentucky Motor Vehicle Commission issues auto dealer licenses in the state. The licensing process includes furnishing a range of documents besides the Kentucky auto dealer bond.
The typical requirements include providing a proof of an established place of business, appropriate insurance policies, licensed sales personnel, business name documents, business sign and separation of facilities. You can complete your application form online. The licensing fee is $100.
How are bond claims handled for auto dealer bonds?
Understanding how bond claims work starts with differentiating between bonds and insurance. Your Kentucky auto dealer bond does not protect your dealership. Instead, it is a shield for your customers, protecting them from any fraudulent activities that you might engage in.
If an affected party files a claim against your bond and it gets proven, you can be liable to pay them a compensation up to the penal sum of your bond. At first, your surety covers the costs, but you need to reimburse it afterwards.
This means that bond claims are a serious matter and need to be avoided. They can harm your dealership’s finances, as well as its good name. Plus, after a bond claim, it can be difficult to get bonded again.