What Is a Massachusetts Auto Dealer Bond?
Massachusetts car dealers need to obtain a license from their city or town authority, so that they can operate in compliance with the law. If they are going to deal only with used cars, they are asked to post a Massachusetts auto dealer bond as a part of the licensing process.
Just like other auto dealer bonds, your Massachusetts car dealer bond is an extra guarantee for the state and the general public, that you will abide by state regulations governing your trade. It protects them from potential fraud and misuse on the part of auto dealers.
Your bond works like any other surety bond. It is, in practice, a contractual agreement between three parties. The surety provides the bonding, the obligee is the commonwealth of Massachusetts that requires the bond, and your dealership is the principal that has to post the bond.
- Surety Bond Name: Massachusetts Motor Vehicle Dealer Bond
- Surety Bond Amount: $25,000
- Obligee: Your local motor vehicle dealer licensing authority
- Required Expiration Date of the Bond: Expires along with the license
If your business does not follow its contractual obligations, an affected party can file a claim against your bond, which can have serious financial consequences. You can get an overview of the bond claims process for auto dealers in the Questions section below.
Questions about Auto Dealer Bonds in Massachusetts
- How much does a Massachusetts auto dealer bond cost?
- Can I get a Massachusetts auto dealer bond with bad credit?
- How do I get my Massachusetts auto dealer bond?
- How do I renew my Massachusetts auto dealer bond?
- How do I get my Massachusetts auto dealer license?
- How are bond claims handled for auto dealer bonds?
How much does a Massachusetts auto dealer bond cost?
Class II auto dealers, which means Massachusetts used car dealers, are required to post a $25,000 bond in order to obtain their Massachusetts dealer license.
This amount represents the surety bond amount, or the maximum penal sum that can be paid on a proven claim against your bond.
In reality, you get your Massachusetts auto dealer bond by covering only a percentage of the full bond amount. This is referred to as the bond premium, which is the actual surety bond cost for you.
The usual percentages for standard bonding are in the range of 1%-3%. Thus, for your $25,000 bond, you might have to pay only $250-$750.
|Surety Bond Cost Based on Credit Score|
|Surety Bond Name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Massachusetts Motor Vehicle Dealer Bond||$25,000||$188-$375||$250-$750||$625-$1,250||$1,250-$2,500|
The fraction of the bond that you have to pay is determined once your surety makes an assessment of your personal and business finances. It takes into consideration factors such as your personal credit score, business stats, assets and liquidity, and professional know-how. The better these indicators are at the time of your bond application, the lower you can expect your bond cost to be.
You can get a full overview on how your surety bond cost is formulated here.
Can I get a Massachusetts auto dealer bond with bad credit?
Financial problems can be a major hurdle in obtaining the Massachusetts auto dealer bond you need in order to get licensed and run your dealership. As experts in the challenges that auto dealers face, Lance Surety Bonds is proud to offer our Bad Credit Program as a solution to this problem.
Applicants with low credit scores, past tax liens, civil judgments, or bankruptcies can expect bond premiums in the range of 5%-10%. While the cost is slightly higher to compensate for the increased risk, the program offers tailor-made solutions for dealers with problematic finances.
No matter your credit score, we’re committed to finding the best rate for your particular circumstances. Through our powerful partnerships with multiple A-rated, T-listed surety companies, we have access to various bonding options and can choose the matching one for your case.
How do I get my Massachusetts auto dealer bond?
You can start the process of obtaining your Massachusetts motor vehicle dealer bond today. Just apply online for a free Massachusetts auto dealer bond quote.
When you submit your full bonding application, we’ll be able to assess your exact bond price. The process is easy and straightforward, so you can focus on your business priorities.
Call us at (877) 514-5146 for any questions you have about the bonding process or your application.
For a full overview, you can consult our bonding process page.
How do I renew my Massachusetts auto dealer bond?
Your Massachusetts used car dealer bond is continuous, which means you always need to have it active while you’re operating your business. Usually it’s renewed on an annual basis together with your Massachusetts car dealer license.
When you get bonded with Lance Surety Bonds, you’ll never have to worry about missing your bond renewal deadline. It’s our task to send you a renewal reminder months in advance. This gives you enough time to react, and we’ll further contact you if needed. Renewing your bond on time means you can keep your license valid, and your dealership operating.
The good news is that with every renewal, you have the opportunity to lower your bond cost. If the year has been good and you’ve managed to improve your finances, your Massachusetts auto dealer bond price will likely go down.
How do I get my Massachusetts auto dealer license?
Massachusetts auto dealer licenses are issued by your local city or town and not on the state level. Depending on your local requirements, you’ll need to supply a list of documents together with your Massachusetts auto dealer bond in order to get licensed.
The usual requirements include a complete application, liability insurance, zoning certification papers, a criminal background check and paid license fees. You can consult the Massachusetts Registry of Motor Vehicles’ Chapter on Dealer Licensing.
How are bond claims handled for auto dealer bonds?
Your Massachusetts auto dealer bond does not work in the same way as insurance. Its purpose is to protect the state and your clients, instead of your business.
If your dealership engages in fraudulent activities or misdeeds, you can face a claim on your bond. Affected parties can be reimbursed up to the penal sum of the bond. Proven claims are a serious financial threat to your business. Initially the surety covers the costs, but you need to repay it afterwards.
The wisest course of action is to stick to your legal commitments and avoid claims. Besides financial harm, they can jeopardize your reputation, and your ability to get bonded in the future.