Virginia Auto Dealer Bond Explained
Just like other states, Virginia legislation implies that all auto dealers get licensed and obtain an auto dealer bond as part of the licensing application. The Virginia Department of Motor Vehicles requires that applicants post a $50,000 surety bond in order to conduct their businesses.
The Virginia auto dealer bond follows the same basic principle just like any other bond. The bond is essentially a contractual agreement involving three parties: the principal (the dealership), the obligee (the Virginia Motor Vehicle Dealer Board) and the surety (the institution or company underwriting the bond).
The auto dealer bond is necessary as it will be protecting the state and its citizens from any possible illegal activities the dealer might engage in. It is essentially a safety measure that ensures your business follows the provisions of Chapter 15, Title 46.2 of the Virginia Code.
Questions about Auto Dealer Bonds in Virginia
Who needs the Virginia auto dealer bond?
Both new and used vehicles dealers in Virginia need to get licensed in order to proceed with conducting their businesses. Getting bonded is an essential part of the licensing process and dealers need to post a bond in the amount of $50,000.
In the Commonwealth of Virginia the agency overseeing new and used vehicle dealer licensing is the Motor Vehicle Dealer Board, while the DMV is taking care of the motorcycle, trailer and recreational vehicles. That means that in the bonding process the Motor Vehicle Dealer Board is the obligee that the bond will be protecting.
Virginia Motor Vehicle Dealer Board
2201 W. Broad Street, Suite 104
Richmond, VA 23220
How much does the bonding cost?
Dealers are required by the Virginia Department of Motor Vehicles to post a $50,000 surety bond as part of their licensing procedure. The annual premium you will be paying, however, is just a fraction of the whole bond amount, usually a percentage varying between 1% and 3%.
Keep in mind that auto dealer bonds are subject of underwriting, which means that the final bonds cost will be formed based on your financial background. The major factor taken into account is your personal credit score.
The following table can give you an example of how the auto dealer bond premium varies according to your credit score.
|Surety bond type||Surety bond amount||Credit score above 700||Credit score between 650-699||Credit score between 600-649||Credit score between 599-550||Credit score below 549|
|Virginia Motor Vehicle Dealer Bond||$50,000||$375-$750||$500-$1500||$1250-$2500||$2500-$3750||$3750-$5000|
Are bad credit dealer bonds available in Virginia?
There are still options for good bonding deals left for you, even if you have a bad credit. Lance Surety Bonds has its own bad credit program designed to help applicants with bad or even no credit score get the best deal possible.
Keep in mind that bad credit is a higher risk factor for bonding companies. This means the premiums will be slightly increased, between 5% and 10% to be precise. That will serve as a safety measurement against the higher risk. Lance Surety Bonds, however, works only with A-rated, T-listed bonding companies which ensure you get top rates for your score.
How to get a Virginia auto dealer bond?
Auto dealer bonds are underwritten by surety bond companies, based on an evaluation of your business and financial background, with credit score playing the most important role in the quoting process.
You can get your free quote by accessing our online application and submitting your request. Our team will get back to you within minutes with your personal bond quote. For further questions, feel free to reach out at (877) 514-5146. Our experts will assist you with anything you need to know about the Virginia auto dealer bond.
If you want to get acquainted with the bonding process in details, check our “How to Get Bonded” page for more information on the process of obtaining an auto dealer bond.
When should I renew my bond?
The Virginia auto dealer bond will not expire automatically when the dealer’s license does. It will continue indefinitely from license term to license term.
What happens if I get a bond claim?
If dealers fail to comply with Virginia state laws and regulations regarding their business operations, a claim might be filed against them. The surety company will cover the compensation initially but the dealer will have to repay the reimbursement eventually.
It’s always better to reach a settlement before going to court. If the claim is valid this will not only cost you money but can also affect your reputation and increase your premium in the future. That’s why it’s best that you do avoid claims at all costs.