What is a Connecticut Auto Dealer Bond?
Many businesses operating in the state of Connecticut must follow specific rules for obtaining a license in order to run the business legally, including motor vehicle dealers. Any dealership or individual involved in the sale or exchange of vehicles must hold a valid license and have a surety bond in place. This surety bond, known as a Connecticut auto dealer bond, acts as a form of protection for customers of licensed auto dealers.
If an auto dealer fails to comply with state laws when conducting transactions with customers, a claim can be made against a Connecticut auto dealer bond. A successful claim results in compensation paid to the individual or party involved in the transaction to cover any financial losses incurred. Connecticut auto dealer bonds are meant to ensure the buying public has some safety net when conducting business with licensed auto dealers.
Who Needs a Connecticut Auto Dealer Bond?
In Connecticut, auto dealers may fall into different categories, depending on the types of vehicles they sell or exchange. Both new and used auto dealers are required to have a Connecticut auto dealer bond in place. Auto repairers and rental or leasing dealers are also required to have a valid bond in order to conduct business.
Connecticut Auto Dealer Bond Obligee Details
As with other surety bonds, a Connecticut auto dealer bond represents a contract between various parties. The principal of the bond is the licensed auto dealer, while the surety company is the one providing the bond to the principal. The state's licensing authority that requires a bond to be in place is known as the obligee of the bond.
Connecticut auto dealer bonds have the following obligee:
State of Connecticut Department of Motor Vehicles
Dealers and Repairers Section
60 State Street
Wethersfield, Connecticut 06161
How Much Does a Connecticut Auto Dealer Bond Cost?
A Connecticut auto dealer bond's price is determined by several different factors, the first of which is the amount of the bond that needs to be secured. For repairers, a bond of $5,000 is required, while rental or leasing companies must have a $10,000 bond. New and used auto dealers in Connecticut must have a $50,000 bond. Auto dealers and repairers do not pay the entire amount of the bond, however.
The surety company providing a Connecticut auto dealer bond calculates a bond premium which the auto dealer pays. The bond premium ranges from 1 to 10% of the bond total. Auto dealers that have a solid financial history and healthy credit background pay a lower bond premium than auto dealers with a limited or negative financial history.
How do You Get a Connecticut Auto Dealer Bond?
Licensed auto dealers in Connecticut may start the process of obtaining an auto dealer bond by submitting a brief online application. The surety company reviews the details of the application, including the bond type, amount, and financial history of the auto dealer, to determine the bond price. Once the bond premium is paid, a Connecticut auto dealer bond is in place. However, a bond must be renewed at the same time an auto dealer license renews, every two years.