What Is an Arizona Wholesale Dealer Bond?
Similarly to most states, wholesale dealers in Arizona need to meet a range of licensing requirements before getting the right to operate lawfully. Obtaining a wholesale dealer bond is among the typical criteria you need to meet.
This type of auto dealer bond, just like all others, functions as a safety net for the state and for your customers. It guarantees a fair reimbursement in case you engage in malpractice in your capacity as a wholesale auto dealer.
The surety bond is a contract between three entities. Your wholesale dealership is the principal that needs to get bonded. The Arizona Department of Transportation is the obligee which imposes the requirement. The third party is the surety that provides the bonding.
Questions about Wholesale Dealer Bonds in Arizona
When do I need this bond?
If you want to launch a wholesale dealership in Arizona, you have to undergo the licensing procedure set by the state Department of Transportation. Among the main requirements that you have to meet is posting a $25,000 surety bond. Its purpose is to ensure your legal compliance with Title 28 of the Arizona Revised Statutes and any other applicable legislation.
How much does the surety bond cost?
In order to obtain an Arizona wholesale dealer license, you need a $25,000 surety bond. What you have to pay to get bonded is only a fraction of this bond amount. It is called the bond premium. For applicants with stable finances, the common bonding rates are between 1% and 5%.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Arizona wholesale dealer bond||$25,000||$187.5-$375||$250-$750||$625-$1,250||$1,250-$2,500|
What is the process of setting your surety bond cost? Your surety has to examine your personal credit score and business finances, as well as any assets and liquidity that you can showcase. On the basis of these factors, it determines how risky it is to provide the bond for you. The more solid your overall application is, the smaller your bond cost is likely to be.
Can I get an Arizona wholesale dealer bond with bad credit?
For applicants with financial issues such as a low credit score, bankruptcies, tax liens, or civil judgements, Lance Surety Bonds runs its Bad Credit Surety Bonds program. Even if your credit is not perfect, you can still get bonded with us.
You can expect a bonding rate in the range of 5% to 10%, which is needed in order to compensate for the higher bonding risk. As we collaborate closely with a number of A-rated, T-listed surety companies, our bonding options are diverse and at the best financial conditions.
How do I get started with the bonding?
We have prepared a detailed guide on the bonding process. If you’re looking for more information, make sure to check out our How to Get Bonded page.
Lance Surety Bonds’ experts are available to answer your questions and help you with your bond application. Just call us at (877) 514-5146.
How are bond claims handled for wholesale dealers?
Your wholesale dealer bond works like a safety net for your customers. If you engage in illegal or harmful practices, you can end up with a claim against your surety bond. This is how a party which has suffered damages because of your actions can demand a fair compensation.
The maximum penal sum that a claimant can seek is $25,000, which is the bond amount you have provided. You are fully liable for all costs on proven claims. Your surety can take over the payments at first, but you need to reimburse it afterwards. Thus, it’s best to stay away from situations that can give rise to claims. They are costly and harmful for your business.