What is a Wisconsin Auto Dealer Bond?
As in many other states, auto dealers operating in Wisconsin are required to have a license before opening their doors. This license comes with a requirement to obtain a Wisconsin auto dealer bond as well, as a way to protect customers interacting with a licensed dealership. If fraud or other illegal activities take place when transacting business, customers who are harmed financially in the process can make a claim against a Wisconsin auto dealer bond.
Auto dealer bonds are a three-party agreement involving a surety company, a principal (the auto dealer), and the obligee (the state authority requiring the bond, the Wisconsin Department of Transportation). The Wisconsin auto dealer bond guarantees that auto dealers will comply with rules set by the Department of Transportation, and that the surety company will pay claims on behalf of the dealer. When a claim is successful, though, the auto dealer is responsible for repaying the claim amount.
Do I Need a Wisconsin Auto Dealer Bond?
Any individual or business that plans to sell a motor vehicle for profit must hold a valid license as an auto dealer in the state of Wisconsin. Securing a surety bond as an auto dealer is part of the licensing requirements mandated by state law. Wisconsin auto dealer bonds are necessary for those selling retail new or used vehicles, wholesale dealers, and motorcycle dealers.
Obligee Details for Wisconsin Auto Dealer Bonds
In Wisconsin, the obligee for an auto dealer bond is the Department of Transportation. The Dealer and Agent division of the department manages the licensing process, as well as receives information on Wisconsin auto dealer bonds and their renewals. Auto dealers in Wisconsin submit applications and bond details to the department at the following address:
Department of Transportation
Dealer and Agent Section
PO Box 7907
Madison, Wisconsin 53707
What Does a Wisconsin Auto Dealer Bond Cost?
Both new and used auto dealers are required to post a Wisconsin auto dealer bond of $50,000. However, dealers do not have to pay the full bond amount in order to meet this requirement. A Wisconsin auto dealer bond costs a small percentage, between 1 and 10%.
An auto dealer bond rate depends heavily on personal credit score and the business financials of the dealership. Credit history plays a part because the surety company wants to feel confident that the dealer is a low risk for a future bond claim. Poor credit indicates otherwise, and so the cost of a Wisconsin auto dealer bond will be higher if a dealer’s credit history is below standard.
How Do You Get a Wisconsin Auto Dealer Bond?
You can secure a Wisconsin auto dealer bond by applying online. In the process, you receive a free quote based on the factors mentioned above, and the surety company will guide you through the steps for completing the bonding requirement for your auto dealer license.
Renewal of a Wisconsin Auto Dealer Bond
Each auto dealer license issued in the state of Wisconsin expires 12 months after it is issued. While there is no specific expiration date for an auto dealer license or its corresponding bond, renewals need to be completed before the 12-month term ends. The surety company issuing a Wisconsin auto dealer bond provides renewal details in the few months prior to the end of the term.