What Is a Maryland Wholesale Dealer Bond?
If you want to work as a wholesale dealer in Maryland, you will need to undergo a licensing procedure. As a part of it, you have to obtain a wholesale dealer bond.
This is a type of auto dealer bond that provides a safety mechanism for the state and your customers. It ensures your legal compliance with applicable state regulations.
Your wholesale dealer bond is in essence a contractual agreement between three parties. Your dealership is the principal that needs the bond. The Maryland Department of Transportation is the obligee that imposes the bond requirement. The surety is the bond provider.
Questions about Wholesale Dealer Bonds in Maryland
When do you need this bond?
Any party that wants to operate as a wholesale dealer in Maryland needs to get licensed with the Motor Vehicle Administration at the Department of Transportation. In order to obtain your Maryland wholesale dealer license, you have to obtain a bond between $15,000 and $150,000, depending on the number of vehicles sold. The bond guarantees your compliance with applicable state statutes.
What is the Maryland wholesale dealer bond price?
The bond amount you have to post to get your Maryland license is between $15,000 and $150,000. The surety bond cost that you have to pay is based on this bond amount, but is in fact only a small fraction of it. It is called the bond premium. The usual rates that good credit applicants can expect are between 1% to 5%.
When you apply with a surety, it examines a range of personal and business factors to assess your profile. It has to consider your personal credit score, business financials, and assets and liquidity. The stronger your application is, the smaller your bond cost is likely to be.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Maryland wholesale dealer bond: 1-250 vehicles sold||$15,000||$112.5-$2,225||$150-$450||$375-$750||$750-$15,000|
|251-500 vehicles sold||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$2,500|
|501-1,000 vehicles sold||$35,000||$262.5-$525||$350-$857||$875-$1,750||$1,750-$3,500|
|1,001-2,500 vehicles sold||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$5,000|
|More than 2,500 vehicles sold||$150,000||$1,125-$2,250||$1,500 to $4,500||$3,750-$7,500||$7,500-$15,000|
Can I get a wholesale dealer bond with bad credit?
Yes, it is possible to get bonded even if you have a low credit score, tax liens, bankruptcies, and civil judgements. Lance Surety Bonds has designed its Bad Credit Surety Bonds program for applicants struggling with financial problems.
The bonding rates that you can expect are slightly higher - in the range of 5%-10%. This is needed because of the higher bonding risk. Due to our exclusive partnerships with numerous A-rated, T-listed surety companies, however, we are able to offer you a great bonding option whatever your credit situation is.
How do I get my wholesale dealer bond?
Ready to learn more about the way bonding works? We have prepared an in-depth resource on the topic, available on our How to Get Bonded page.
Our bonding experts are here to help. You can reach us at (877) 514-5146 to get assistance with your queries.
What happens if I get a bond claim?
Unlike insurance for your dealership, your wholesale dealer bond functions as a safety net for your customers, and not for you. This means that if you transgress from your legal obligations, you can receive a claim against the bond. In this way, any harmed party can demand a compensation.
The financial reimbursement they can seek is between $15,000 and $150,000, dependent on the bond amount you have posted. All costs on proven claims are ultimately your responsibility, as this is the bond indemnity agreement. Even if your surety covers the payments at first, you have to repay it afterwards. As a result, bond claims can lead to serious financial and reputational harm for your business, so it is best to avoid them.