What is a District of Columbia Auto Dealer Bond?
Several states throughout the country require motor vehicle dealers to obtain a license in order to sell vehicles to the public. In the District of Columbia, part of the licensing process involves securing a surety bond, known as a District of Columbia auto dealer bond. This surety bond is a form of protection for consumers that buy vehicles from a licensed auto dealer.
Should the auto dealer fail to comply with DC rules and regulations when conducting business, a claim can be made against an auto dealer bond for compensation. Auto dealers are required to repay any successful claims over time.
Who Needs a District of Columbia Auto Dealer Bond?
Nearly all types of auto dealers are required to have a license in DC and an auto dealer bond. Both new and used auto dealers, as well as auto repair dealers must have a District of Columbia auto dealer bond to comply with DC laws. The amount of the bond required, however, varies depending on the category into which the auto dealer falls.
DC Auto Dealer Bond Obligee Details
As a surety bond, a District of Columbia auto dealer bond involves three parties under a contract. The licensed auto dealer is known as the principal of the bond, or the individual or business required to secure the bond for licensing purposes. The surety company provides the bond to the principal, and the licensing authority responsible for overseeing auto dealers in DC is known as the obligee of the bond.
For DC auto dealers, the obligee of an auto dealer bond is:
Department of Consumer and Regulatory Affairs
941 N Capitol Street, NE
Washington, DC 20002
How Much Does a District of Columbia Auto Dealer Bond Cost?
The price of a District of Columbia auto dealer bond varies from one auto dealer to the next based on the amount of the bond required and the financial history of the dealer. New and used auto dealer operating in DC must have a bond of no less than $25,000. However, auto dealer repairers are required to have a bond of $2,000 or $5,000, depending on the number of employees. Fortunately, these are not the out-of-pocket costs for a DC auto dealer bond.
Surety bonds are priced as a percentage of the total bond amount, usually ranging from 1 to 10%. The surety company that provides a District of Columbia auto dealer bond determines the percentage by evaluating the financial track record of the auto dealer. If credit has been an issue in the recent past or the auto dealer is not otherwise financially stable, the price for the bond will be higher.
How do You Get a DC Auto Dealer Bond?
Obtaining your District of Columbia auto dealer bond is a simple process that starts with a short application submitted online. The surety company provides a bond quote based on the application details, as well as instructions on how to pay for the bond and finalize the process. DC auto dealers must renew their auto dealer bond every two years, at the same time an auto dealer license renews.