What is an Idaho Auto Dealer Bond?
Auto dealers operating in most states in the country must comply with licensing requirements if they want to operate a legal business. Securing an Idaho auto dealer bond—a type of surety bond—is one of these requirements for auto dealers in Idaho.
An Idaho auto dealer bond protects customers of a licensed auto dealer as well as the state from fraudulent business activities or failure to comply with state rules and regulations in the operation of an auto dealer business.
An Idaho auto dealer bond is not insurance for the auto dealer, but customers or the state may file a claim against the bond to cover financial damages they incur due to the auto dealer's conduct.
How Does an Idaho Auto Dealer Bond Work?
The bond functions as a three-way contract between the auto dealer, the state, and the surety company.
The state is the obligee in the contract, which in this case is the Idaho Transportation Department. The state requires the auto dealer to secure a bond so that they are more likely to abide by state laws and regulations.
The auto dealer is the principal in the contract who must secure an auto dealer bond to get licensed and legally operate their auto dealership. Securing the bond protects their customers in case financial problems arise at the business by fault of the dealer.
The surety company provides the auto dealer bond to the auto dealer and pays any claims made by customers. The auto dealer must repay the surety company over time for these claims.
Idaho Auto Dealer Bond Obligee Details
Information for the obligee of an Idaho auto dealer bond can be found here:
Idaho Transportation Department
Dealer Services Division
PO Box 34
Boise, Idaho 83731
Who Needs an Idaho Auto Dealer Bond?
In the state of Idaho, all auto dealers must have a license. That means that anyone who plans to engage in the business of selling new or used vehicles is required to post an Idaho auto dealer bond.
Auto dealers in Idaho include individuals or businesses that sell motorcycles, ATVs, UTVs, snowmobiles, retail new or used vehicles, or wholesale new or used vehicles.
How do You Get an Idaho Auto Dealer Bond?
Licensed auto dealers can submit a quote request online to see what the cost of the bond will be. Once approved and paid, the surety company provides the bond details to the auto dealer for their records. Idaho auto dealer bonds renew every two years, at the same time the license renews.
How Much Does an Idaho Auto Dealer Bond Cost?
An Idaho auto dealer bond varies in cost based on two main factors: the total amount of the bond required by the state and the financial track record of the licensed auto dealer.
It is important to understand what the state requires in terms of the bond amount. Motorcycle, ATV, UTV, and snowmobile dealers must have a bond of $10,000, retail auto dealers need a $20,000 bond, and wholesale dealers must secure a $40,000 bond.
The amount of the bond is not the out-of-pocket cost paid by the auto dealer. The surety company providing the bond calculates a bond premium as a percentage of the total bond amount. The cost ranges from 1 to 10 percent of the total bond amount for most auto dealers.
Can I Get an Idaho Auto Dealer Bond with Bad Credit?
Because the surety company takes a risk when issuing an Idaho auto dealer bond, a credit check is required. Auto dealers with a healthy credit history pay a lower bond premium than those with a questionable financial history.
Getting an Idaho auto dealer bond with bad credit is possible, but you should expect to pay a higher percentage of the total bond amount because the surety company takes on a greater risk if you have poor financial history
How Do I Renew my Idaho Auto Dealer Bond?
Your Idaho auto dealer bond must be renewed annually. To renew your bond, you must complete your renewal application before your expiration date to keep your bond valid. You’ll receive a renewal notice each year to remind you when your bond is about to expire.