What Is a New Jersey Auto Dealer Bond?
In order to get their dealer license, New Jersey car dealers must submit an auto dealer bond to the New Jersey Motor Vehicle Commission (NJ-MVC). This is part of the state’s licensing requirements for auto dealers.
The auto dealer bond serves as protection for the state of New Jersey, as well as for the customers of any licensed New Jersey car dealer. It protects these parties from auto dealer dishonesty, fraud, and other illegal activities. The bond is meant to guarantee that dealers will comply with state car sales rules and regulations.
In other words, your New Jersey auto dealer bond is like an agreement between yourself as the principal, the New Jersey Motor Vehicle Commission as the obligee, and the surety underwriting the bond.
Obligees may file claims against a bond and receive compensation by the surety, when they are negatively affected by the actions of the principal. Read on below for answers to some common and important questions about New Jersey car dealer bonds, and how claims can occur.
Questions about Auto Dealer Bond in New Jersey
How much does a New Jersey auto dealer bond cost?
Both new and used car dealers in New Jersey are required to post a $10,000 bond when applying for their New Jersey dealer license. This is called the surety bond amount.
The bond premium, on the other hand, is the cost that dealers must pay in order to get their bond. This premium is only a percentage of the full amount of the bond. Different applicants are offered different rates on their premiums.
So-called standard rates for a New Jersey auto dealer bond are between 1% and 3% of the full amount. As you can see from the table below, the cost of obtaining your bond at this rate would be somewhere between $100-$300.
|Surety Bond Cost by Credit Score|
|Surety Bond Name||Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|New Jersey Motor Vehicle Dealer Bond||$10,000||$100-$150||$100-$300||$250-$500||$500-$1,000|
Exactly how much your bond will cost is determined by your surety, after a close look at your personal credit score and other factors, such as your financial assets, and even your business experience. The better your score and your financials, the lower your premium is.
Can I get a New Jersey auto dealer bond with bad credit?
Yes. With us, most New Jersey car dealers are able to get a bond, even though you may have trouble with your credit score.
Our Bad Credit Program enables you to get a bond by paying a premium in the range of 5%-10%. The slightly higher rates are necessary because of the increased risk of bonding applicants with lower credit. By obtaining your bond, you can keep developing your business, improve your credit score over time, and qualify for better rates in the future.
Lance Surety Bonds works with well-known and established A-rated and T-listed surety companies which gives us access to a variety of markets, and the best quotes for every type of applicant.
How do I get my New Jersey auto dealer bond?
Apply online now to get a free quote on your New Jersey auto dealer bond! Applying for your bond is very easy and takes only a minute or two. Approvals for these bonds are also very fast.
Call us at (877) 514-5146 to speak to one of our bonding experts here at Lance Surety Bonds, for advice, information or assistance with your application.
How do I renew my New Jersey auto dealer bond?
Like your New Jersey auto dealer license, your New Jersey auto dealer bond must be renewed on an annual basis.
Renewing your bond is as simple as getting it in the first place. Lance Surety Bonds sends a renewal reminder a couple of months before your bond expires, so you don’t have to worry about missing your deadline.
Whenever you apply to have your bond renewed, you are offered a new quote which, again, is based on your credit score and financial situation. If you have improved your score and your situation has changed for the better, you will likely be offered a lower premiums over time.
How do I get my New Jersey auto dealer license?
To get your New Jersey auto dealer license, you need to apply at the New Jersey Motor Vehicle Commission. A checklist of all required documents is available at the Commission’s website.
Documents needed for your license include a municipal approval, a copy of your driver license, a fingerprint request notification form, papers of incorporation or formation, a copy of your property deed or lease, among others. You will have to pay a $100 license fee as well as a $257 registration fee, which you need to pay to the MVC.
How are bond claims handled for auto dealer bonds?
If a legitimate claim is made against your New Jersey motor vehicle dealer bond, this can constitute a serious problem for your business’s reputation and financial integrity.
This is because bonds are more like a line of credit, rather than insurance. If you do not comply with state regulations or act dishonestly towards your customers, the bond is in place to secure their compensation up to the full amount of your bond.
When a claim is filed, your surety covers the costs of the claim. As with any line of credit, you are then required to repay your surety for any payments it has made to claimants. This is why having a claim filed against your bond can seriously hurt your dealership.
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