What is a North Carolina Auto Dealer Bond?
Car dealerships located in North Carolina are required to have a license to operate their business legally. The licensing process includes submitting an application along with a North Carolina auto dealer bond. This type of surety bond acts as a guarantee that the dealership will work with customers in line with state regulations and rules.
A North Carolina auto dealer bond is structured as a three-party agreement between the principal, the obligee, and the surety. Licensed auto dealers are the principal, while the obligee, the North Carolina Division of Motor Vehicles, is the state authority mandating the bond be in place. The surety is the company providing the bond to the dealership.
Do I Need an Auto Dealer Bond in North Carolina?
In North Carolina, any person or entity engaged in the sale of motor vehicles for profit is considered an auto dealer. A license is required to operate legally, as is a North Carolina auto dealer bond. Both new and used motor vehicle dealers are required to meet North Carolina auto dealer bond minimums for each location they operate.
North Carolina Auto Dealer Bond Obligee Information
Under North Carolina state laws, auto dealers must have an active license in order to do business legally. Part of the licensing requirements for new or renewing auto dealers is to post a North Carolina auto dealer bond to the obligee, the North Carolina Department of Transportation, Division of Motor Vehicles. The specific obligee information is below:
Department of Transportation, Division of Motor Vehicles
License and Theft Bureau Dealer Unit
3129 Mail Service Center
Raleigh, NC 27697
What Does a North Carolina Auto Dealer Bond Cost?
North Carolina dictates the amount of the bond a dealership needs based on the number of locations it operates. For a single location, a North Carolina auto dealer bond of $50,000 is necessary. Each additional salesroom requires a $25,000 auto dealer bond. Fortunately, licensed dealers do not need to pay the entire amount to obtain a bond.
An auto dealer bond is priced as a small percentage of the total bond amount. Depending on several factors, including personal credit score, industry experience, and business financials, the rate of the bond will fall between 1 and 10%. If your credit is not strong or business financials not well-documented, you are likely to pay a higher percentage for your North Carolina auto dealer bond.
How Do I Get a North Carolina Auto Dealer Bond?
Obtaining your North Carolina auto dealer bond starts with submitting a quote request to a surety agency. Based on the details of your dealership, you are provided a price for your bond. You can then submit a formal application and complete the payment and bonding process.
North Carolina Auto Dealer Bond Terms and Expiration Date
North Carolina auto dealer bonds are continuous, meaning no stated expiration date is required on new bond certificates. However, auto dealer bonds must be renewed periodically to ensure a licensed auto dealer is still compliant with auto dealer requirements.