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.
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.