What is a Kentucky Auto Dealer Bond?
Licensed auto dealers in Kentucky are required to obtain a Kentucky auto dealer bond. As a type of surety bond, a Kentucky auto dealer bond acts as a guarantee that a dealership will operate in compliance with state laws and regulations. If a customer of a dealership experience financial damages due to illegal or fraudulent business practices, a claim can be made against the bond for reimbursement.
A Kentucky auto dealer bond involves three parties. The licensed auto dealership is the principal, while the state authority requiring the bond, the Kentucky Motor Vehicle Commission, is the obligee. The surety company provides the bond to the licensed auto dealer and guarantees claims will be paid. It is important to note that any successful claims are repaid by the licensed dealership.
What Does a Kentucky Auto Dealer Bond Cost?
Depending on the type of auto dealership you operate, a Kentucky auto dealer bond between $15,000 and $100,000 is required. Fortunately, you are not responsible for paying the entire bond amount up front. Instead, the surety company providing your Kentucky auto dealer bond charges you a percentage of the bond, ranging from 1 to 3%.
Some auto dealers will pay a higher rate for their Kentucky auto dealer bond because they pose a higher risk to the surety company. Personal credit is a major factor in determining the bond price. Negative marks like bankruptcy, tax liens, or civil judgments on your credit report are a red flag in terms of your risk to the surety. This does not mean you cannot get a Kentucky auto dealer bond; it may mean you will pay a higher percentage to get covered.
How Do You Get a Kentucky Auto Dealer Bond?
You can start the process of securing the Kentucky auto dealer bond you need by submitting a simple form online. You will receive a free quote based on your business details, and instructions on how to finalize bonding for your dealership.