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 Oklahoma car dealer bond needs.
What Are the Different Types of Oklahoma Car Dealer Licenses?
Oklahoma issues dealer licenses to 1) retail dealers selling new motor vehicles, 2) dealers selling only used vehicles, and 3) wholesalers selling only to other dealers. This article focuses on obtaining a license as a used motor vehicle dealer, which is issued by the Oklahoma Used Motor Vehicle and Parts Commission (UMVPC)
What Are the Steps in the Licensing Process?
Download the application for a used vehicle dealer license. Before you fill it out, you’ll need to:
- Register your business with the Oklahoma Secretary of State.
- Establish a permanent business location and obtain proof of local zoning approval.
- Obtain a current report (Name-Based, Sex Offender, Violent Offender) from the Oklahoma State Bureau of Investigation.
- Purchase a $25,000 garage liability insurance policy.
- Purchase a $25,000 Oklahoma car dealer bond.
Fill out the application in its entirety, get it notarized, and submit it to UMVPC in Oklahoma City, along with all supporting documents and a check or money order for the application fee (currently $600). The Commission meets monthly to review applications. Before your license will be issued:
- You must complete a pre-licensing course offered by the Oklahoma Motor Vehicle Commission (OMVC).
- Your location must pass an inspection by a Commission inspector.
Why is an Oklahoma Car Dealer Bond Required?
The bonding requirement provides a measure of protection against financial loss by the state of Oklahoma (the “obligee” mandating the bond) and the public. First, the bond requires the dealer (the bond’s “principal”) to operate in compliance with all applicable Oklahoma statutes and OMVC rules. Second, if the principal commits a violation that results in financial harm to the state (e.g., failing to pay taxes, fees, or fines) or to the public (e.g., misrepresenting the condition of a vehicle), the injured party can file a claim against the bond. If the claim is found to be valid, the principal is legally obligated to pay it.
How Are Oklahoma Car Dealer Bond Claims Paid?
There is a third party to the legally binding surety bond agreement—the “surety,” the company guaranteeing the bond. The surety guarantees that the principal will pay any claim that the surety determines is valid. However, the usual practice is for the surety to pay a valid claim initially and then be repaid by the surety for the resulting debt. The surety is indemnified against any legal liability for claims and therefore can take legal action against a principal who fails to reimburse the surety for claims paid by the surety on behalf of the principal.
How Much Does an Oklahoma Car Dealer Bond Cost?
The amount of the annual premium for an Oklahoma car dealer bond is the product of multiplying the $25,000 bond amount by the premium rate assigned to the principal by the surety. That premium rate is based on the underwriters’ assessment of the risk that the principal won’t readily repay the surety for claims initially paid by the surety. The best measure of that risk is the principal’s personal credit score.
The higher the principal’s credit score is, the lower the risk, and the lower the premium rate for an Oklahoma car dealer bond, potentially as low as one percent. That would make the bond’s annual premium only $250. The reverse is also true. The lower the credit score, the higher the risk to the surety, and the higher the premium rate.
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