What is a New York Auto Dealer Bond?
Used car and franchised dealers in New York need to maintain a dealers license in order to sell cars in the state. For the sake of protecting car buyers, the state mandates that auto dealers have a valid auto dealer bond for as long as they are in business.
An auto dealer bond is a type of surety bond, which can serve as the basis for a claim if a dealership is conducting business unethically. It’s important for dealers to be up-to-date on all laws and statutes regulating their trade to avoid being subject to a claim. If a bond claim is found to be valid, a dealership must reimburse the claimant, which can be a sum up to the total bond coverage listed on the dealer bond.
Here is a quick view of the dealer bond requirement:
Surety Bond Name: New York Auto Dealer Bond
Surety Bond Amount: Used-car dealers: $10,000 or $25,000
(Increased to $25,000 or $100,000 effective April 8, 2017)
Franchised dealers: $50,000
Obligee: NYS DMV Bureau of Consumer & Facility Services
P.O. Box 2700
Albany, NY 12220-0700
Expiration Date: Biannual renewal
Ready to apply for your New York auto dealer bond? Simply click on the ‘Apply Now’ button and follow the instructions. For further reading, consult the Questions section below.
Frequently Asked Questions
- Who needs to obtain a New York auto dealer bond?
- How much does a New York auto dealer bond cost?
- I have bad credit. Can I still get a New York auto dealer bond?
- How do I get a New York auto dealer bond?
- How do I renew my New York auto dealer bond?
- How do I get a New York dealer license?
- What happens if there is a claim against my auto dealer bond?
Who needs to obtain a New York auto dealer bond?
The requirement is mandatory for used-car and franchised dealers alike. According to the text of the bond form, the only exception are dealers who exclusively sell vehicles which will be converted into tow trucks, school buses, garbage trucks, motorcycles, recreational vehicles, snowmobiles, trailers, mobile homes, or construction equipment.
How much does a New York auto dealer bond cost?
The price you will have to pay for your New York auto dealer bond depends on several factors. The first factor is the type of bond you need to get. Depending on whether you are a used-car or a new-car dealer and how many vehicles you sell, you will need an auto dealer bond with a different total bond amount.
The total bond amount is the maximum coverage that can be extended to claimants in case of a successful claim against your dealership. To obtain a dealer bond, you do not pay the total bond amount, but rather a bond premium once every two years. Your bond premium is calculated by the bonding company, and mostly depends on your personal credit score.
|Surety Bond Name||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Used Car Dealers who sell less than 50 cars per year||$20,000||$150-$300||$200-$600||$500-$1,000||$1,000-$2,000|
|Used car dealers who sell more than 50 cars per year||$100,000||$750-$1,500||$1,000-$3,000||$2,500-$5,000||$5,000-$10,000|
|Franchises, dealers of larger vehicles (SUVs, light trucks, etc)||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$5,000|
There are other factors that can also influence your bond premium. For more information check out our What Does a Surety Bond Cost? page.
I have bad credit. Can I still get a New York auto dealer bond?
Bonding companies assume higher risk when they underwrite bad credit auto dealer bonds, so sometimes bad credit can be a problem.
Lance Surety Bonds has a bad credit surety bonds program, which enables us to get an auto dealer bond for 99% of our applicants. And we guarantee that your bond will be accepted by the New York DMV because all of our bonds are issued by A-rated and T-listed companies.
Bond premiums for bad credit applicants are in the range of 5% to 10% of the total bond amount required.
How do I get a New York auto dealer bond?
Lance Surety Bonds has a 100% secure online application that you can complete in just a few minutes. This way you save time and unnecessary paperwork.
If you any questions about the bonding requirement, don’t hesitate to call us at (877) 514-5146.
How do I renew my New York auto dealer bond?
Bond renewal is not a complicated process. You will receive a bond quote from you surety bond agency and, once you pay it, your surety bond will be renewed.
At Lance Surety Bonds, we make sure our clients never miss their bond renewal deadlines by sending out renewal reminders. Bond quotes are determined on the same basis. If, for example, you improve your credit score, you can see your premiums reduced.
How do I get a New York dealer license?
Getting a New York auto dealer bond is mandatory if you want to get and keep your dealer license, but there are also a number of other steps.
Among them are obtaining a Sales Tax ID Number, purchasing a dealer’s starter kit, obtaining worker compensation insurance and paying applicable fees. Be sure to check all requirements on the DMV’s website before you file your application, or you risk rejection.
What happens if there is a claim against my auto dealer bond?
Bond claims are never a pleasant scenario for dealers, and despite your best efforts they can happen. However, if you are always up-to-date with applicable laws and follow them to the letter, you should be in the clear.
If a claim nonetheless happens, keep track of all communication with the client, so you can defend your case in court. If possible, you can try and settle the dispute out of court. If the case is proven, you will have to reimburse the claimant for an amount that may not exceed the total amount listed on your surety bond.
Still have questions about New York auto dealer bonds? No problem, just call us at (877) 514-5146 and we will gladly help.