What is a New Mexico Auto Dealer Bond?
Businesses operating as motor vehicle dealers in the state of New Mexico may be required to have a license in order to run the business legally. One aspect of obtaining an auto dealer license is securing a surety bond, known as a New Mexico auto dealer bond.
This type of surety bond is intended to protect both the customers of the auto dealer and the state from damages they may incur if the auto dealer does not operate in line with state regulations. A claim can be made against a New Mexico auto dealer bond to provide compensation to a harmed party, and the auto dealer is responsible for repaying successful claims.
Who Needs a New Mexico Auto Dealer Bond?
There are several categories of auto dealers under New Mexico law that require a license, and therefore, must have a New Mexico auto dealer bond in place. Both new and used auto dealers, as well as manufacturers, wholesale dealers, and motorcycle dealers, must comply with these regulations. Boat, ATV, trailer, and RV dealers may also be required to secure a New Mexico auto dealer bond.
New Mexico Auto Dealer Bond Obligee Details
As with any surety bond, a New Mexico auto dealer bond is a three-party agreement. The principal of the bond is the auto dealer, and the bond is provided by the surety company. The state's licensing agency or authority requiring a bond to be in place is known as the bond obligee.
In New Mexico, the obligee of an auto dealer bond is as follows:
New Mexico Taxation & Revenue Department
Motor Vehicle Division, Dealer Licensing Bureau
505 Marquette NW, Suite 1501
Albuquerque, New Mexico 87102
How Much Does a New Mexico Auto Dealer Bond Cost?
The cost of a New Mexico auto dealer bond depends on a few factors, including the total amount of the bond required. Most auto dealers must have a bond of $50,000 in place, but motorcycle dealers need a $12,500 bond. Fortunately, this is not the price an auto dealer pays for a bond in New Mexico.
Bonds prices are calculated as a small percentage of the bond total, usually ranging from 1 to 10%. An auto dealer must provide some information about financial standing as well as credit history to determine where in that range the price falls. The surety company essentially extends a form of credit to the auto dealer when issuing a bond, and so those with a strong financial track record will pay a lower percentage of the bond total.
How do You Get a New Mexico Auto Dealer Bond?
Auto dealers in New Hampshire can start the bonding process by submitting an application online. The type of bond requested, along with the amount of the bond and the financial history of the dealer is part of the application. After reviewing these details, the surety company provides a bond quote and details on how to finalize the process. New Mexico auto dealer bonds must be renewed each year by March 31.