What is a North Carolina auto dealer bond?
If this is your first time applying for a North Carolina dealer license, you probably have questions about the dealer bond requirement. The most important things to know about North Carolina auto dealer bonds are that they are a mandatory licensing requirement and that they are not protection to your business. On the contrary, they are designed to protect the public.
Similarly to other surety bonds, you can think of auto dealer bonds as a three-party agreement between a principal (the dealer), an obligee (the state) and a surety (bonding company).
Surety bond name: North Carolina Motor Vehicle Dealer Bond
Surety bond amount: $50,000 (for one salesroom)
$25,000 (for each additional salesroom)
Obligee: North Carolina Division of Motor Vehicles
License & Theft Bureau
3125 Mail Service Center
Raleigh, NC 27697-3125
Required expiration date: Yearly renewal
Ready to apply for your auto dealer bond? Fill out our online application and we’ll give you a call to take you through the whole process seamlessly. If you wish to learn more about this particular type of bond, read the Questions section below.
Questions about Auto Dealer Bonds in North Carolina
How much does a North Carolina auto dealer bond cost?
It’s easy to get a rough idea of how much you will need to pay to obtain your auto dealer bond. First you need to know the total bond amount required, which is $50,000 if you have one salesroom. Add $25,000 for each additional salesroom you will have.
$50,000 might sound like a lot, but don’t worry. This is the maximum coverage that can be paid to claimants, but it isn’t the amount you are required to pay to get bonded. Instead you pay only a small percentage of that amount, known as the bond premium. Your premium will depend mostly on your personal credit score and some additional details such as your financial strength.
Good credit score applicants pay no more than 3% of the bond amount in most cases.
|Surety Bond Cost Based on Credit Score|
|Bond Type||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|New & Used Motor Vehicle Dealer and/or Auto Recycler Bond||$50,000||$375-$750||$375-$750||$1,250-$2,500||$2,500-$3,500|
For more detailed information, be sure to check out our What Does a Surety Bond Cost? Page.
Are bad credit dealer bonds available in North Carolina?
Lance Surety Bonds welcomes applicants with all types of credit scores. Thanks to our exclusive bad credit surety bonds program we can confidently say that 99% of applicants will be able to get bonded despite their credit issues. The only two exceptions are applicants with open bankruptcies or late child support payments.
Bad credit applicants represent a higher risk for bonding companies, which means they typically get higher premiums as well: between 5% and 10%.
How can I apply for a North Carolina auto dealer bond?
We offer a fast and secure online application that will quickly take you through the whole process. Here’s how it works: you fill out all the necessary information (takes no more than a few minutes), after which we get in touch with you and ask you to supply the necessary documents. You will get a bond quote and upon payment, we will do the rest. Normally, it takes us 1-2 business days to get you the bond you need.
How do I renew my North Carolina auto dealer bonds?
Since dealer bonds offer a large sum of money as protection, but are paid for in premiums, they need to be renewed year after year. The process is simple and it only requires that you pay the bond renewal quote.
One more reason to choose Lance Surety Bonds: if you get your bond with us, we will send you a reminder a few months ahead of the deadline to make sure you don’t miss it and lose your dealer license.
How can I get a North Carolina dealer license?
It is important to be aware of all pre-licensing requirements prior to submitting your application. In addition to procuring an auto dealer bond, you will also have to:
- Buy garage liability insurance
- Have your lot inspected
- Pay applicable fees
- Provide a copy of your credit report
- Provide a copy of a background check
- Complete a dealer training course (used-car dealers only)
A complete list of the dealer licensing requirements can be found on the website of the DMV.
What happens if there is a claim?
Claims against auto dealer bonds can occur under different scenarios. For example, a customer can file a claim if they feel you have acted unethically during the sale of the vehicle.
If the customer’s claim is found valid, a court will establish how much you will have to compensate them for. This amount cannot exceed the total bond amount listed on the surety bond.
Surety bond companies are legally responsible in case of claims and may interfere on your behalf if they believe the customer’s claim is groundless. Whatever the type of dispute, it’s advisable to try and settle it out of court. If that is not possible, be sure to keep all your communications well-documented, to act as evidence in court.