What is a Kansas Auto Dealer Bond?
Car dealerships operating in the state of Kansas must have a valid license in order to run their business in line with state regulations. Obtaining a license requires the dealership to secure a Kansas auto dealer bond which works to protect customers of the dealership from fraud and illegal practices. A Kansas auto dealer bond is a guarantee that licensed auto dealers will comply with the rules set by the state.
Similar to other surety bonds, a Kansas auto dealer bond is a contract between you, known as the principal, a surety company providing the bond, and the obligee which requires the bond in the first place. The Kansas Division of Vehicles under the Department of Revenue handles both licensing and bonding requirements as the obligee of a bond agreement.
Do I Need a Kentucky Auto Dealer Bond?
Several different types of motor vehicle dealers operating in Kentucky must have a valid license to do business, as well as a Kentucky auto dealer bond. These include:
- Used vehicle dealers
- New (franchised) vehicles dealers
- Wholesaler dealers
- Auction dealers
- Motorcycle and leasing dealers
Obligee Details for Kentucky Auto Dealer Bonds
In the state of Kentucky, any licensed auto dealer must also secure a bond in order to fully comply with licensing requirements. The obligee of a Kentucky auto dealer bond is the Motor Vehicle Commission under the Kentucky State Treasurer. Contact information for the obligee can be found below:
Motor Vehicle Commission Office
105 Sea Hero Road, Suite 1
Frankfort, Kentucky 40601
What Does a Kansas Auto Dealer Bond Cost?
State laws require newly licensed auto dealers in Kansas to have a bond of at least $30,000. This is not the price you pay for the bond, however. You pay a percentage of the total bond requirement, typically ranging from 1 to 10%.
A Kansas auto dealer bond is a form of credit that is extended to your dealership to cover bond claims. When a customer files a successful claim against the bond, the surety company pays for the claim amount and you as the dealership repay the claim. Because of this structure, your personal credit is a factor in determining the cost of your Kansas auto dealer bond. Poor credit due to late payments, judgments, or liens may mean you are a higher risk for a future bond claim. High-risk auto dealers pay more for a Kansas auto dealer bond than those who have excellent or good credit.
How Do You Get a Kansas Auto Dealer Bond?
When starting the licensing process as an auto dealer, you will also want to get a quote for your Kansas auto dealer bond. You can do so by submitting a short application online. The surety company will provide you with your bond pricing and guidance on how to complete the bonding process.
Bond Expiration Date and Terms for Kentucky Auto Dealers
Similar to other states requiring a surety bond from licensed auto dealers, there is no set expiration date for a Kentucky auto dealer bond. Instead, auto dealers must renew their bond at the same time their auto dealer license is renewed with the state. Failure to renew a Kentucky auto dealer bond could lead to an invalid auto dealer license.