What is a Maine Auto Dealer Bond?
To legally work as an auto dealer in the state of Maine, individuals and businesses must have a valid auto dealer license. One critical component of obtaining a license is securing a Maine auto dealer bond. This type of surety bond helps protect consumers from fraudulent or misleading business practices that may lead to financial loss.
Should a licensed auto dealer in Maine fail to comply with the law when conducting business, a claim can be made against the auto dealer's bond. Claims can be expensive for auto dealers as they are responsible for repaying successful claims covered by the bond.
Who Needs a Maine Auto Dealer Bond?
As in many states, any business or individual engaged in the sale or exchange of motor vehicles is considered an auto dealer in Maine. This activity requires a license and a Maine auto dealer bond. The amount of the bond required, however, varies depending on the number of vehicles sold throughout the year. Additionally, both new and used vehicle dealers must have a bond, as well as motorcycle, equipment, and heavy trailer dealers operating within the state.
Maine Auto Dealer Bond Obligee Details
Surety bonds are a three-party contract between the licensed auto dealer, known as the principal of the bond, the surety company that provides the bond, and the state's licensing authority, known as the obligee of the bond.
In Maine, the obligee of any auto dealer bond is as follows:
Department of the Secretary of State
Bureau of Motor Vehicles, Dealer and Agent Services
29 State House Station
Augusta, Maine 04333
How Much Does a Maine Auto Dealer Bond Cost?
Auto dealer bonds are priced based on two main factors: the amount of the bond required and the financial strength and history of the licensed auto dealer applying for the bond. In Maine, auto dealers that sell up to 50 vehicles need a bond of $25,000. Those that sell between 51 and 100 vehicles need a $50,000 bond, and those that sell between 101 and 150 must have a bond of $75,000. Any Maine auto dealer that sells more than 151 vehicles must have a $100,000 auto dealer bond in place.
The amount of the bond is not the price you pay out of pocket, however. Instead, the surety company providing the bond determines the bond premium which ranges from 1 to 10% of the bond total. This percentage is based on the financial track record and credit history of the auto dealer. Because the surety company initially pays claims on behalf of the auto dealer, they are extending a form of credit to the business. Therefore, dealers with stronger financial histories pay a lower bond premium for a Maine auto dealer bond.
How do You Get a Maine Auto Dealer Bond?
Getting a Maine auto dealer bond begins with a short application submitted online. The surety company reviews the bond amount requested as well as your financial track record to determine a bond quote. Once the bond premium is paid, a Maine auto dealer bond is finalized and details are sent to the obligee. Maine auto dealer bonds must be renewed at the same time an auto dealer licensed is renewed.