The ABC's of launching your Florida car dealership
In the State of Florida you are considered an auto dealer if you buy or sell 3 or more motor vehicles (for mobile homes and recreational vehicles the requirements states 1 or more) in any given 12-month period.
Auto dealer license applications are filed with your regional DMV office. On the application you can choose between one of four types of dealers. Franchised dealers have an agreement with a specific automotive manufacturer. They can sell both new and used cars. Independent dealers can only deal used vehicles. Wholesaler dealers can also sell either new or used cars but only to car dealers and not to the general public. Finally, auctioners are wholesaler dealers who sell through bidding.
Other application requirements
After you decide what kind of dealer you want to be, you need to have your business location approved by the DMV, provide fingerprints, buy garage liability insurance and file some business documents. You also need to pay a $300 license fee for each of your locations.
Then we get to one of the most important requirements – the auto dealer bond, also known as DMV bond or MVD bond. Auto dealer bonds are a license type of surety bonds. They are required from all car dealers as a guarantee that the bonded dealer will operate their business in accordance with state laws and regulations. It also serves to protect customers from scams and fraud. In case of a claim against your dealership, you and the surety that underwrote the dealer bond will be jointly liable to compensate all incurred losses.
Getting an auto dealer bond in Florida
Regardless of the type of license, Florida requires all car dealers to post an auto dealer bond to the amount of $25,000. What you pay is an annual premium – a percentage of the whole bond cost. Your premium is calculated after a thorough evaluation of your dealership, as well as your personal credit score. A good credit score is especially important, as surety bonds companies always assume a 0% loss ratio. A quick way to find out your premium is by asking for an online quote at a surety bonds agency’s website. For people of good standing the percentage is typically between 1% – 5% of the total amount of the bond.
People with a bad credit score (650 or below) will find it harder to get bonded in Florida, but if there’s a will, there’s a way. Bad credit dealer bond programs are available if your credit standing is not perfect. The dealer bond will be slightly more expensive – 5% – 15% percent premium – and sometimes a small collateral might be required. People with open bankruptcies and late child support payments are typically the two cases when surities decline a dealer bond.
Latest posts by Vic Lance (see all)
- Tips on Renewing Your North Dakota Fundraising License and Bond - July 18, 2017
- Florida Citrus Fruit Dealer License and Bond Renewal Deadline Coming Up! - July 13, 2017
- How to Get a Florida Public Adjuster License - June 26, 2017