Indiana Auto Dealer Bonds

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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 your Indiana auto dealer bond needs.

What Are They?

An Indiana auto dealer bond, also known as an Indiana vehicle merchandising bond, is a type of license and permit surety bond. This is because purchasing one is a requirement for obtaining a license to operate a dealership in the state of Indiana.

The bond serves as a dealer’s pledge to do business in compliance with all applicable Indiana statutes. That includes paying all fines, penalties, and fees levied against the dealer by the Indiana Secretary of State, Auto Dealer Services Division.

Additionally, an Indiana auto dealer bond provides a source of funds for paying claims filed against the bond by those able to prove a financial loss attributable to the unlawful or unethical business practices of a licensed dealer.

Who Needs Them?

Anyone applying to the Indiana Secretary of State for a new or renewal license as an auto dealer must purchase a $25,000 auto dealer surety bond, regardless of the specific type of dealer license—dealer, automobile auctioneer, distributor, manufacturer, wholesaler, etc. Failure to maintain an active auto dealer bond at all times can result in suspension or revocation of the dealer’s license to do business in the state.

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.

How Do They Work?

The legal basis for an Indiana auto dealer bond is the surety bond agreement, which is a legally binding contract between three parties:

  • The “obligee” requiring the bond—the Indiana Secretary of State.
  • The “principal” purchasing the bond—the auto dealer.
  • The “surety” underwriting and approving the bond—the bonding company.

Any violation of the Indiana auto dealer bond agreement by the principal can result in the injured party filing a claim against the bond. The principal bears sole legal responsibility for paying all valid claims.

The surety typically pays the claimant directly and then collects reimbursement from the principal. This extension of credit by the surety to the principal ensures prompt payment of the claim and gives the principal some time to repay that debt, often in installments rather than a single large sum.

What Do They Cost?

The main underwriting concern for the surety is the principal’s creditworthiness as measured by the principal’s credit score. There is always some degree of risk in extending credit, so there is a direct relationship between the principal’s credit score and the premium rate the principal will pay for an Indiana auto dealer bond. A principal with great credit should qualify for the standard market rate of 1% to 2% of the required $25,000 bond amount.

Get a Quote

Our surety bond professionals will get you the Indiana auto dealer bond you need at a competitive rate.