What Is a Minnesota Auto Dealer Bond?
A Minnesota auto dealer bond is one of the requirements for obtaining a Minnesota auto dealer license. If you want to sell more than five motor vehicles within a year in the state, you need to be duly bonded and licensed.
Auto dealer bonds do not protect your dealership, but instead safeguard the interests of your clients and the state. Their purpose is to provide financial reimbursement to any affected parties, in case your business commits fraudulent activities or transgresses state rules.
A Minnesota motor vehicle dealer bond works like all other types of surety bonds. It involves three parties that enter a contractual agreement. The surety underwrites the bond and provides the backing, the obligee– in this case the state of Minnesota– asks for the bond, and the principal is your dealership.
- Surety Bond Name: Minnesota Motor Vehicle Dealer Bond
- Surety Bond Amount:
- $5,000 for boat, snowmobile, small horse trailer or motorized bicycle dealer bond
- $50,000 for auto dealer bond
- Obligee: Minnesota Department of Public Safety Driver and Vehicle Services 445 Minnesota Street, Suite 186 St. Paul, MN 55101-5186
- Required Expiration Date of the Bond: Yearly renewal
The penal sum of the bond can be used to compensate people who have a proven claim against you. You can read more about the way claims against auto dealers are handled in the Questions section below.
Questions about Auto Dealer Bond in Minnesota
How much does a Minnesota auto dealer bond cost?
Most Minnesota auto dealers need to post a $50,000 auto dealer bond. If you’re planning to sell only boats, snowmobiles, small horse trailers, or motorcycles, you’ll have to post a $5,000 bond.
The above-mentioned figures refer to the surety bond amount that you are asked to provide. This number represents the maximum reimbursement that an affected party can obtain, in case of a proven claim against you.
Getting bonded, however, requires paying only a percentage of the bond amount. This is called the bond premium, and is your actual surety bond cost.
You can expect to pay between 1% and 3% of the bond amount, if you qualify for the standard bonding market. If you need to obtain a $50,000 Minnesota auto dealer bond, your premium is thus likely to be between $500 and $1,500.
|Surety Bond Cost by Credit Score|
|Surety Bond Name||Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Minnesota Auto Dealer Bond||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$5,000|
|Minnesota Boat, Snowmobile, Small Horse Trailer or Motorized Bicycle Dealer Bond||$5,000||$100-$250||$100-$250||$125-$250||$250-$500|
How is your surety bond cost set then? You’ll be asked to provide a series of documents, so that your surety can examine your personal, as well as your business financial stats. One of the most important criteria is your personal credit score.
Other factors that affect your bond premium include your professional experience in the field, as well as the assets and liquidity that you can showcase. You can expect your surety bond cost to be lower as your financial stats improve. For more information you can check out page explaining surety bond costs in detail.
Can I get a Minnesota auto dealer bond with bad credit?
One of the toughest tasks for an auto dealer is getting bonded with problematic finances. This can be a major obstacle for many professionals to start their business successfully. At Lance Surety Bonds, we are committed to providing dealers with the Minnesota auto dealer bonds that they need. For this purpose, we’ve created our Bad Credit Program.
Participating in the program means that your bond premiums will be in the range of 5%-10%, an increase needed to mitigate the higher risk. The bad credit bonding option is, however, a great chance for dealers with past tax liens, civil judgments, bankruptcies, or bad credit to get bonded and licensed. This is how they can work on improving their finances over time.
While the rates are slightly higher, getting your Minnesota auto dealer bond from Lance Surety Bonds means you’re guaranteed to get the best value for the price. We work with a number of A-rated, T-listed surety companies. That’s the reason why we can handpick the right bonding program for your particular situation.
How do I get my Minnesota auto dealer bond?
Your bonding process does not need to be complicated. Apply online today for your free Minnesota auto dealer bond quote.
After that, just compile the full list of required documents, and submit your full application. Then you will get your exact bond price and can proceed with obtaining your bond.
In case you have any questions, you can learn more about the bonding process here or call us at (877) 514-5146. Lance Surety Bonds’ experts are here to assist you.
How do I renew my Minnesota auto dealer bond?
Together with the annual renewal of your Minnesota car dealer license, you need to obtain a new Minnesota auto dealer bond too.
When you get bonded with with Lance Surety Bonds, you will not need to worry about missing the bond renewal deadline. You will receive a renewal reminder from us a couple of months earlier. With enough time ahead, you can plan your bond renewal and get it done on time. This way, you can be sure your Minnesota auto dealer license will not be revoked.
Don’t forget that you can decrease your bond premium over time, by improving your finances and credit score. Each renewal is an opportunity to lower your surety bond cost.
How do I get my Minnesota auto dealer license?
The Minnesota Department of Public Safety is the entity issuing Minnesota auto dealer licenses. To obtain yours, you will have to furnish a list of documents together with your Minnesota motor vehicle dealer bond.
In most cases, you will have to submit a proof for a commercial office space, zoning approval papers and liability insurance. The usual fees are a $100 administration fee and a $150 application fee. For motorized bicycle, boat and snowmobile trailer dealer, there is only an application fee of $10.
How are bond claims handled for auto dealer bonds?
To understand bond claims, it’s important to keep in mind that auto dealer bonds are not insurance for your business. They are a layer of protection for the state and for your clients.
In case you break the state regulations for auto dealers, an affected party may file a claim on your Minnesota auto dealer bond. If proven, you will need to reimburse this party up to the penal sum of the bond. At first, it is your surety which covers the expenses. Soon after, however, you need to financially compensate it in full.
Because of their serious consequences, it’s best to avoid claims in your dealership’s operations. Such cases can negatively impact your finances and reputation, and can create obstacles for future bonding.
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