What is a Missouri Auto Dealer Bond?
New and used car dealerships in the state of Missouri are required to hold a valid license to do business. Part of the licensing process involves posting a security, either in the form of a letter of credit or a Missouri auto dealer bond. This security acts as a guarantee that you will interact with customers according to current state laws and regulations. If you fail to do so, a customer can make a claim against your Missouri auto dealer bond for compensation.
Like other surety bonds, a Missouri auto dealer bond is a contract between three different parties. You, the principal, are required to purchase a bond from a surety company. The obligee, which is the Missouri Department of Revenue, is the state authority requesting the bond.
What Does a Missouri Auto Dealer Bond Cost?
Every licensed car dealership must have a letter of credit or a Missouri auto dealer bond of at least $50,000 in order to remain compliant. You do not have to pay the full amount of the security, however. Instead, a Missouri auto dealer bond costs a fraction of the $50,000, typically ranging from 1 to 3%. In some cases, though, the price of a bond may be higher.
Auto dealer bond prices are based on a review of your personal credit history and business financials. When credit has been an issue in the past, you are likely to be a higher-risk bondholder. The surety company providing your Missouri auto dealer bond offsets this risk by requiring a higher bond premium.
How Do I Get a Missouri Auto Dealer Bond?
Even if you have bad credit, obtaining your Missouri auto dealer bond is not a complicated process. You can submit a request for a free bond quote online, and finalize your bonding as a licensed auto dealer after paying your bond premium.