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.
Who Needs an Auto Dealer Bond in Missouri?
Any individual or entity selling six or more vehicles in any calendar year is considered an auto dealer under Missouri state law. Engaging in the sale of vehicles for a profit requires a license and a corresponding Missouri auto dealer bond. Licensed auto dealers requiring a bond may fall into one of the following categories:
- Franchised (new) motor vehicle dealers
- Used auto dealers
- Wholesale auto dealers
- Motorcycle or trailer auto dealers
Missouri Auto Dealer Bond Obligee Details
Under Missouri state law, licensed auto dealers operating a business in the state must secure a Missouri auto dealer bond as part of their ongoing licensing requirements. The obligee of the bond is the Missouri Department of Revenue, with contact information as follows:
Missouri Department of Revenue
Motor Vehicle Bureau, Dealer Licensing Section
301 West High, Room 370
Jefferson City, Missouri 65105
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.
Missouri Auto Dealer Bond Term and Expiration Date
A Missouri auto dealer bond may be issued at any time throughout the year. However, the term of an auto dealer bond expires on December 31 each year. This means that auto dealers must renew their Missouri auto dealer bond by this time to ensure they remain in good standing with a valid auto dealer license.