Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your New Jersey auto dealer bond needs.
What Are They?
A New Jersey auto dealer bond is a type of license and permit surety bond—a bond that guarantees that an auto dealer will operate in accordance with all applicable New Jersey laws and regulations. The New Jersey Motor Vehicle Commission (MVC) issues several different types of dealer licenses depending on the type of vehicles sold, and all of them require the purchase of a surety bond as part of the licensing or license renewal process.
In addition to serving as a dealer’s pledge to operate lawfully and ethically, an auto dealer bond provides funds for compensating consumers who suffer a financial loss as a result of a violation of the terms of the surety bond agreement.
Who Needs Them?
Whether you’re selling new autos, used autos, both, or other types of vehicles, you’ll need to purchase a $10,000 New Jersey auto dealer bond to get your dealer license initially or to renew it when it expires. In the surety bond agreement, MVC is the “obligee,” the party requiring the bond.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A dealer whose unlawful or unethical business practices are the direct cause of a consumer’s financial loss is likely to have a claim filed against his New Jersey auto dealer bond. The surety company that issued the surety bond will investigate the matter and determine whether the claim is valid. If it is, the surety company (known as the “surety” in the surety bond agreement), may try to negotiate a mutually acceptable settlement.
If that’s not successful, the surety will go ahead and pay the claim, firm in the knowledge that the auto dealer (the “principal”) is legally obligated to reimburse any such advance payments. That obligation exists because a surety bond agreement is a legally binding contract.
Every surety bond represents a line of credit extended to the principal by the surety. In reimbursing the surety, the principal is essentially repaying a cash advance or loan, typically in installments rather than one lump sum.
What Do They Cost?
Two factors enter into the calculation of the premium rate a given principal will pay for a New Jersey auto dealer bond: the $10,000 bond amount established by the obligee and the premium rate determined by the surety. The surety’s main concern is the amount of risk involved in potentially extending credit to the principal.
The key factors entering into the assignment of a premium rate are the principal’s personal credit score, overall personal and business financial strength, and industry experience. With good credit, the premium rate for a New Jersey auto dealer bond should be in the range of 1% to 3%. Credit-challenged principals could pay a higher premium.
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You can count on our experienced surety bond professionals to get you the New Jersey auto dealer bond you need at a competitive rate.