Rhode Island Auto Dealer Bond Overview
As part of the auto dealer licensing process, the Rhode Island Dealers’ License and Regulations Office requires all dealers to post an auto dealer surety bond in the amount of $50,000.
The Rhode Island auto dealer surety bond works similarly to other surety bonds - it is an agreement between three parties. In this case the dealership is the principal, the Rhode Island Division of Motor Vehicles is the obligee, and the surety is the company or entity underwriting the bond.
The purpose of the surety bond is to protect the state of Rhode Island and customers from any possible unlawful business activities dealers might engage in. The bond ensures that dealers will comply with the provisions of Chapter 1499 Public Laws of 1956. In case of a bond claim, the dealer might have to reimburse the surety up to the full bond amount, depending on the case.
Questions about Auto Dealer Bonds in Rhode Island
Who needs to post this bond?
Everyone planning on selling more than 4 vehicles per year in Rhode Island is obliged by state law to obtain an auto dealer license. As part of the licensing process, dealers need to post an auto dealer bond in the amount of $50,000 to the DMV, prior to conducting the business.
Here’s the Rhode Island auto dealer bond obligee information:
Rhode Island Division of Motor Vehicles
Dealer’s License & Regulations Office
100 Main Street
Pawtucket, RI 02860
How much does it cost?
The amount of the Rhode Island auto dealer bond required by law is $50,000. However, this is not the final cost of what dealers have to pay to get bonded. The annual premium is in fact just a percentage of the total amount and it depends on a series of factors related to your financial background. Whether you are a potentially risky applicant or not is mainly defined by your personal credit score.
Usually the percentages for a standard bonding vary between 1% and 3% of the bond amount. Here’s an easy illustration of how to estimate the final bond cost, based on your credit score.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Rhode Island Auto Dealer Bond||$50,000||$375-$750||$500-$1,500||$1,250-$,2500||$2,500-$5,000|
What if I have bad credit?
Clients who have bad or even no credit score still have a chance to get a good bonding deal with Lance Surety Bonds. Our Bad Credit Program is created to help dealers with far from perfect financial background get the best bond available for them.
The premium amount for the Bad Credit Program usually ranges between 5%-10%. These rates are slightly increased as opposed to those for good credit applicants, in order to compensate the higher risk that comes along with low credit.
Keep in mind that Lance Surety Bonds works with a list of established A-rated, T-listed surety companies. That means no matter what your score is, you are still going to get the best price and quote possible.
How do I get the Rhode Island auto dealer bond?
You can access our online application to submit your request and we will reach you back with a free quote within minutes.
If you still have questions about the surety bond and the bonding process, feel free to call our experts at (877) 514-5146. They will explain everything you need to know about the Rhode Island bonding requirements.
Interested to learn more about the dealer bonds? Check our “How to Get Bonded” page to learn more information on the process of obtaining an auto dealer bond.
When do I have to renew the surety bond?
The Rhode Island auto dealer bond are in full force until canceled. They, however, expire on December 31 of each year so make sure you have renewed your auto bond by then.
What happens if I get a bond claim?
As the Rhode Island auto dealer bond exists to protect the state and its citizens, if you happen to engage in a fraudulent activity you can expect a claim filed against you. Those activities include but are not limited to: using unfair methods of competition, knowingly advertising untrue or misleading statements of facts, employing fraudulent devices etc.
Compensation for the affected party can be as high as the penal sum of the bond. The surety company will provide initial reimbursement but eventually it’s up to the dealer to repay it. Claims should be avoided at all costs also because they could pose a serious threat to your business’ reputation.