What Is a Maine Auto Dealer Bond?
Similarly to most states, car dealers in Maine have to get licensed before they can operate legally. During the licensing process with the Secretary of State’s Bureau of Motor Vehicles, you have to obtain an auto dealer bond.
The bond works as an extra layer of protection for the state and your customers. It guarantees you will follow applicable rules and regulations, most notably Chapter 9, Title 29-A of the Maine Revised Statutes. In case you fail to abide by the law, a bond claim can be made against your bond to seek financial reimbursement for harmed parties.
Just like all Maine surety bonds, your dealer bond constitutes a three-party contract. The principal is your car dealership. The Bureau of Motor Vehicles is the obligee, which imposes the bond requirement. The surety backs your business and underwrites the bond.
Maine Bureau of Motor Vehicles
Dealer and Agent Services
29 State House Station
Augusta, ME 04333
Questions about Auto Dealer Bond in Maine
Who has to provide a dealer bond?
If you want to operate as a motor vehicle dealer in the state, you need to get bonded in order to obtain your Maine auto dealer license. This rule applies to anyone who wants to sell more than five vehicles per year. A bond is not required of light trailer dealers.
The licensing authority is the Secretary of State’s Bureau of Motor Vehicles. The bond amount depends on the number of vehicles you sell per year, or the projected sales if you are just starting your business.
When filing your licensing application, you should use the official bond form. You should renew your dealer bond together with your license renewal. Make sure to always keep it active, as this guarantees your legal compliance.
What is the surety bond cost?
Car dealers in Maine have to post a bond between $25,000 and $100,000. The exact amount depends on the number of cars sold within a year. The bond amounts were increased as of September 15, 2017 due to the changes set in Maine House Bill 1084.
Whatever the bond amount that you are required to obtain is, you only have to pay a fraction of it. This is called the bond premium. It is typically between 1% and 3% of amount. This means that for a $25,000 bond, your cost may be between $250 and $750 if your finances are stable.
The surety that provides the bonding for you has to assess your overall financial and business situation. It considers your credit score, business documents, and liquidity or assets you present. This is how it examines the level of risk associated with the bonding. If you are seen as a solid applicant, you will get a lower bond premium.
|Bond Type||Vehicles Sold per Year||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Maine Auto Dealer Bond||Up to 50 vehicles||$25,000||$187.5-$375||$250-$750||$625-$1,250||$1,250-$2,500|
|Up to 100 vehicles||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$5,000|
|Up to 150 vehicles||$75,000||$562.5-$$1,125||$750-$2,250||$1,875-$3,750||$3,750-$7,500|
|More than 150 vehicles||$100,000||$750-$1,500||$1,000-$3,000||$2,500-$5,000||$5,000-$10,000|
Do you need a complete overview of how your bond price is calculated? You can review our surety bond cost page.
Can I get bonded if I have bad credit?
If you struggle with problematic finances, you should not worry about your bonding. At Lance Surety Bonds, we run our Bad Credit Surety Bonds program for applicants with low credit score, tax liens, bankruptcies, and civil judgements. This means you can obtain the bond you need whatever your credit is.
The bonding risk is higher, which raises the bonding rates to about 5%-10%. Since we work with numerous A-rated, T-listed surety companies, we can still shop around for you and offer you a top price.
How do I get my bond?
If you’re ready to see your exact bond price, you can complete our full application and attach your documents. You can consult our extensive How to Get Bonded page for further information.
Lance Surety Bonds’ specialists are here to help. For any questions, you can reach us at (877) 514-5146.
How are bond claims handled for auto dealers?
Bonds do not protect your business as insurance does. Instead, they guarantee your legal compliance with Maine laws. If you engage in fraud and misuse such as misrepresentation of information about vehicles and failure to provide warranty, you can get a bond claim.
You need to reimburse the harmed parties if the claim gets proven. The maximum penalty is the bond amount you have posted, or $25,000 to $100,000 in the case of Maine dealerships. The consequences of a claim can thus be serious, so such cases should be avoided as much as possible.
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