Rhode Island Dealers: Your Dealer Bonds Will Soon Expire

fletch's petoskey auto dealership
As we near the end of the year, it’s time for Rhode Island auto dealers to think about their license renewal. This includes the renewal of their Rhode Island auto dealer bond.

The Rhode Island Division of Motor Vehicles mandates that both your license and dealer bond expire at the end of the year, and must be renewed before December 31st if you want to stay in business in 2017.

If you are a licensed dealer, you have posted an auto dealer bond before. Still, the following information should help you understand more about bond renewal, clarify some uncertainties, and provide some useful new tips.

Do all Rhode Island Dealers need to renew their auto dealer bond?

Yes. This requirement applies to all licensed dealers in the state, regardless of when their license was first issued. The bond is an essential part of the license, so you should actually renew it before your license. You will not be able to fill in your license renewal application without proving you are already the holder of a Rhode Island auto dealer bond.

How does bond renewal work?

To renew your bond, you need to contact your surety provider– not the bonding company itself, but the agency you worked with. They will send you a renewal quote, and if you are satisfied with it, you need only to sign the bond agreement and mail it back to them. Agencies do the actual submission for you.

Normally, a good agency will send you several reminders as the deadline approaches, but it’s never a bad idea to contact your provider and ask about a new quote. Some dealers make the mistake of waiting too long. At the end of November and the beginning of December you will be preparing for the oncoming holiday sales, so you may not have enough time to deal with bond renewal. Moreover, processing times may be delayed as many types of bonds expire at the end of the year and surety underwriters are overwhelmed with applications.

Is there a change in the price of the auto dealer bond?

You probably know that there are two numbers associated with the bond’s price. The total bond amount is the sum set by the state. It signifies the sum up to which you can be sued in case of a claim. However, you are not required to pay that amount. You pay a premium, or a small percentage of that amount.

The Rhode Island DMV mandates that all dealers maintain a $50,000 auto dealer bond, which is the same as last year. Premiums, calculated on an individual basis and based on your personal credit score, vary between 0.75% and 10%. Your personal premium will likely not be very different last year’s.

What if my credit score changed?

It’s true that surety bond costs are in most cases calculated using your credit score, so a negative change in your credit score will increase your premium. But there are also ways to boost your financials and decrease your premium.

Sureties are legally responsible for your claims, and want to know you can repay them. You can show your reliability by demonstrating strong financial statements or liquid assets. Your trustworthiness is increased if you also show that you have successfully operated in the automotive industry for years. Any experience counts, whether as a dealership owner or a salesperson.

Final tip: Work with Lance Surety Bonds

If there’s one last thing you need to know about auto dealer bonds, it’s that the choice of a good surety agency is imperative to finding the best deal.

We have years of experience bonding people with all types of credit scores, and we work only with the best-reputed sureties in the country. Our partnership with them gives you the peace of mind that you are getting bonded at the best possible price, and that your bond will always be accepted by the state.

Don’t believe us? Go ahead and start your application by getting your FREE online bond quote in just seconds. If you have any questions about your bond, call us at (877)-514-5146 and one of our auto dealer bond experts will assist you with your application.

 

 

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.