What is a Mississippi Auto Dealer Bond?
Auto dealers doing business in Mississippi are required to obtain a license through the state. The licensing requirements include posting a surety bond, known as a Mississippi auto dealer bond. This type of bond offers protection to customers of an auto dealership. If a dealer engaged in fraudulent or illegal activity when selling new or used vehicles, the affected customer can make a claim against the Mississippi auto dealer bond for compensation to cover losses.
A Mississippi auto dealer bond is a three-party contract among the principal required to post a bond, the surety company providing the bond, and the obligee requiring the bond.
What Does a Mississippi Auto Dealer Bond Cost?
Licensed dealers in Mississippi must post a bond of $25,000 per location. Mississippi auto dealer bond pricing is only a fraction of this amount, however. Most auto dealers pay between 1 and 5% of the bond total, based on several different factors.
The surety company providing a Mississippi auto dealer bond evaluates a dealer’s personal credit score and business financials to determine the price of the bond. Adverse credit due to financial issues such as bankruptcy, civil judgments, or liens leads to a higher bond cost, potentially up to 10% of the bond total. Auto dealers with a high credit score and a clean credit report pay less because they are a lower risk to the surety company.
How Do I Get a Mississippi Auto Dealer Bond?
Licensed auto dealers can begin the process of getting a Mississippi auto dealer bond by submitting a quick online application. The surety company reviews your business details and credit information and then provides a quote for your bond.