What is an Alaska Auto Dealer Bond?
In nearly all states, auto dealers selling new or used vehicles must have a license through the state in order to operate their business legally. One aspect of the licensing process is securing an auto dealer bond, known as an Alaska auto dealer bond. An Alaska auto dealer bond is a form of insurance for the state and the customers with which the auto dealer conducts business.
If an auto dealer does not comply with state rules and regulations, a claim can be made against an Alaska auto dealer bond. Claims are meant to cover financial losses or damages incurred by the customer or the state based on the auto dealer's activities.
Who Needs an Alaska Auto Dealer Bond?
Auto dealers operating in the state of Alaska are defined as individuals or businesses who engage in the sale of motor vehicles to consumers. Both new and used auto dealers must comply with auto dealer bond requirements. Motorcycle dealers are also required to post a bond. However, boat dealers do not need to be bonded in Alaska.
Alaska Auto Dealer Bond Obligee Details
Similar to other surety bonds, an Alaska auto dealer bond is an agreement between three parties. The licensed auto dealer is the principal of the bond, meaning they are responsible for securing a bond to remain in compliance with the law. The surety company provides the bond to the principal, listing the requestor of the bond as the obligee.
For Alaska auto dealers, the obligee information is as follows:
State of Alaska
Division of Motor Vehicles
1300 W Benson Boulevard, Suite 300
Anchorage, Alaska 99503
How Much Does an Alaska Auto Dealer Bond Cost?
Several factors come into play when determining the price of an Alaska auto dealer bond. The surety company that provides the bond to the licensed auto dealer must take into account the total amount of the bond required, as well as the credit history of the individual applying for a bond. In terms of the amount of the bond, new or used auto dealers in Alaska must secure a $50,000 bond. Motorcycle dealers must have a bond of at least $25,000 to maintain their license. However, these bond amounts do not represent the price of the bond to the auto dealer.
The bond premium, or the cost of the bond to auto dealers, is calculated as a percentage of the total bond amount. For most auto dealers in Alaska, the bond premium falls between 1 and 10% of the bond total. The percentage paid for the bond premium is based on the credit history of the auto dealer. Those who have bad credit pay a higher premium than those who have strong credit when it comes to an Alaska auto dealer bond.
How do You Get an Alaska Auto Dealer Bond?
If you are a licensed auto dealer in Alaska, you may start the process of securing your auto dealer bond by submitting a brief form online. The surety company will need details about the type of Alaska auto dealer bond required, as well as the bond amount. Once a credit check is complete, a bond premium is quoted, and payment can be made. Auto dealers must renew their Alaska auto dealer bond every two years.