What Is a Missouri Auto Dealer Bond?
Missouri car dealers have to get licensed with the state Department of Revenue. You have to obtain a financial security in the form of an irrevocable letter of credit or an auto dealer bond to meet the legal requirements.
The goal of your surety bond is to guarantee your compliance with all relevant laws. It protects your customers against losses caused by potential illegal activities on your side. They can file a bond claim to seek a financial compensation.
Your Missouri surety bond is a contract between three entities. The principal that has to obtain the bond is your auto dealership. The Missouri Department of Revenue is the obligee. The surety is the party that backs your business and provides the bond.
Questions about Auto Dealer Bonds in Missouri
In which cases do you have to get this bond?
The licensing body for Missouri auto dealers is the Motor Vehicle Bureau at the Department of Revenue. Getting a Missouri auto dealer license entails posting a $25,000 security. It is needed for getting a license as a dealer, auctioneer and manufacturer. You have to provide the irrevocable letter of credit or surety bond together with your official license application. The security instrument ensures your compliance with Chapter 301 of the Missouri Revised Statutes.
Missouri Motor Vehicle Bureau
Department of Revenue
PO Box 43
Jefferson City, MS 65105-0043
What is the bond price?
The bond amount you have to obtain when getting licensed as a Missouri dealer is $25,000. The surety bond cost that you have to pay depends on this bond amount. In order to get bonded, you have to cover a bond premium, which is typically in the range of 1%-3%.
The percentage you have to pay is set on the basis of your personal and business finances. Your surety has to consider your personal credit score, business finances, assets and liquidity, and even professional experience. In this way, it can judge the level of bonding risk. The more stable your finances are, 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|
|Missouri auto dealer bond||$25,000||$187.5-$$375||$250-$750||$625-$1,250||$1,250-$2,500|
Can I get bonded with problematic credit?
Lance Surety Bonds operates its Bad Credit Surety Bonds program for dealers with low credit scores, tax liens, bankruptcies, and civil judgements. If you are facing such issues, this program may be the right choice for you.
The bond premiums you can expect are around 5%-10%. The slightly higher percentages are needed in order to compensate for the increased bonding risk. We work with a number of A-rated, T-listed surety companies, so we can still shop around for a top bond option for your particular circumstances.
How do I apply for a Missouri auto dealer bond?
Our How to Get Bonded page is an excellent resource on how bonding works, so you can consult it for further information. For any questions, just call us at (877) 514-5146. We’re happy to assist you.
What happens if I get a bond claim?
The surety bond you have provided protects your customers against potential fraudulent activities you may commit in your capacity as an auto dealer. If a party suffers damages as a result of your actions, they can file a claim against your bond. The maximum reimbursement they can seek is the penal sum of your bond, which is $25,000.
The claim, if proven, may be covered at first by your surety. In this way, the harmed party receives a fast compensation. You have to repay the surety soon after, as per the conditions in your bond indemnity agreement. Bond claims, thus, are a financial threat to your business, so it’s best to avoid them as much as possible.