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 Ohio car dealer bond needs.
What Are the Different Types of Ohio Car Dealer Licenses?
The Ohio Bureau of Motor Vehicles licenses motor vehicle dealers in two main categories: dealers selling new motor vehicles and those selling used vehicles. The definition of motor vehicles includes motorcycles, trucks, APVs and other vehicles.
There are more used vehicle dealerships than new, so the focus of this article is on the licensing of used vehicle dealers.
What Are the Steps in the Licensing Process?
There are several things you’ll need to accomplish before submitting a dealer license application.
- Once you’ve established a legal business entity:
- Register it with the IRS and obtain a Federal Employer Identification Number (FEIN).
- Use the Ohio Business Gateway to register the business with the Ohio Department of Taxation and get a tax ID number.
- Register with the Auditor’s Office in your county to get a Vendor number.
- Secure a permanent location for your business that meets state requirements for used vehicle dealerships as well as local zoning requirements.
- Complete the required six hour of pre-licensing training within the six months prior to submitting your license application.
- Have your fingerprints scanned and the results sent directly to BMV Dealer Licensing.
- Undergo a criminal history record check through the Bureau of Criminal Identification and Investigation (BCI).
- Be able to document a net worth of at least $75,000 upon request by BMV.
- Purchase a $25,000 Ohio car dealer surety bond.
When you have done all of the above, complete the Used Motor Vehicle Dealer application and submit it to BMV, along with all required supporting documents and payment of the fees specified in the application. Your dealership may need to undergo a site inspection before your license is issued.
Why is an Ohio Car Dealer Bond Required?
The $25,000 car dealer bond is your guarantee to abide by all applicable Ohio regulations governing used vehicle sales within the state. If you don’t live up to that guarantee and the state or a consumer experience a financial loss because of your actions, the injured party can file a claim against the bond—a claim that you are legally obligated to pay up to the $25,000 bond amount.
How Are Ohio Car Dealer Bond Claims Paid?
An Ohio car dealer surety bond agreement is legally binding on three parties: the obligee requiring the bond (the state of Ohio), the principal purchasing the bond (the dealer), and the surety guaranteeing the payment of claims. Because of that guarantee, the surety typically pays any valid claim initially, on the principal’s behalf, and is then repaid by the principal. This ensures that the claimant receives prompt payment and gives the principal a little time to come up with the money to repay the surety. If the principal does not repay the surety, the surety has the option of taking legal action against the principal.
How Much Does an Ohio Car Dealer Bond Cost?
How much the principal will pay as the annual premium for an Ohio car dealer bond depends on the premium rate assigned by the surety. The main concern for the surety is the relative ease or difficulty of collecting reimbursement from the principal for claims paid on the principal’s behalf.
The underwriters’ risk assessment is based largely on the principal’s personal credit score. A high credit score suggests a low risk of non-repayment, which merits a low premium rate, typically in the range of one to three percent. On the other hand, a low credit score is a sign of higher risk and results in a higher premium rate. Thus, a principal with good credit should pay an annual premium of somewhere between $250 and $750 for a $25,000 Ohio car dealer bond.
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