What Is a Mississippi Auto Dealer Bond?
Every car dealership in Mississippi has to obtain a state license. Posting an auto dealer bond is one of the indispensable licensing requirements you have to meet.
The purpose of your dealer bond is to protect your customers from unlawful activities on your side. It can provide a financial compensation if you don’t abide by your contractual obligations, or engage in any kind of fraud that leads to damages for them.
Just like all Mississippi surety bonds, your bond functions like a three-party contract. Your dealership that needs the bond is the principal. The relevant state authority is the obligee which imposes the requirement. The surety provides the bonding for your business.
Frequently Asked Questions
When do you need an auto dealer bond?
If you want to get a Mississippi auto dealer license for selling new or used vehicles and for wholesaler, you have to undergo the procedure with the Mississippi Motor Vehicle Commission. The required bond amount for a single location is $25,000. If you want to obtain a license for multiple locations, you can post a $100,000 blanket bond. The bond ensures your compliance with the Mississippi Motor Vehicle Commission Law and Title 63 of the Mississippi Code.
For registering designated agents that can collect taxes, you have to follow the process with the Motor Vehicle Licensing Bureau at the Department of Revenue. The required bond of designated agent is $15,000.
Mississippi Motor Vehicle Commission
1755 Lelia Drive, Suite 200
Jackson, MS 39216
For Designated Agents:
Department of Revenue
PO Box 1033
Jackson, MS 39215-1033
How much does bonding cost?
The surety bond cost that you have to cover is based on the bond amount which you have to provide to state authorities. For new, used or wholesale licenses, you need a $25,000 bond for a single location and a $100,000 for numerous locations. For registering a designated agent, you need a $15,000 bond.
You only need to cover a small percentage of these amounts, called the bond premium. They are typically between 1% to 3% of the bond amount for car dealers with stable finances.
The exact bond cost you have to cover is determined after considering your personal and business finances. That’s how your surety assesses the level of bonding risk. It takes into consideration your personal credit score, business finances, and assets and liquidity. The stronger your overall application is, the smaller your bond premium is likely to be.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Designated agent bond||$15,000||$112.5-$$225||$150-$450||$375-$750||$750-$15,000|
|Mississippi new auto dealer bond for one location||$25,000||$187.5-$375||$250-$750||$625-$1,250||$1,250-$2,500|
|Blanket bond for multiple locations||$100,000||$750-$1,500||$1,000-$3,000||$2,500-$5,000||$5,000-$10,000|
Can I get a Mississippi dealer bond with bad credit?
Even if you struggle with problematic finances, you can still get bonded with us. We have designed our Bad Credit Surety Bonds program for applicants with low credit scores, tax liens, bankruptcies, and civil judgements.
The bond premiums are slightly higher, since the bonding risk is bigger. The typical rates for bad credit applicants are in the range of 5%-10%. Our partnerships with a number of A-rated, T-listed surety companies still allow us to offer you exclusive bonding options.
How do I apply for this bond?
If you’d like to learn more about the way bonding works, you can consult our in-depth How to Get Bonded page. Have more questions? Don’t hesitate to call us at (877) 514-5146. Our bonding experts will be happy to help you.
How are bond claims handled for auto dealers?
If you transgress from your legal obligations and your customers suffer damages as a result of your actions, you may end up with a claim against your bond. This is how harmed parties can seek a reimbursement. The compensation can be up to your bond amount. Some cases in which you can get a bond claim is if you engage in fraud, misuse or other unethical practice in your dealership activities.
The surety that has bonded you may take on the claim costs, so that a quick compensation is ensured for the claimants. You are liable to repay it fully afterwards. Thus, it’s best to stay away from problematic situations that can lead to claims.