What is an Ohio Auto Dealer Bond?
Auto dealers in Ohio are required to get an auto dealer license. Part of the licensing process is securing an Ohio auto dealer bond which works to protect customers from illegal business practices. If an auto dealer does not fulfill its legal obligations when working with the public, a claim can be made against the bond to cover a customer’s financial losses or damages.
An Ohio auto dealer bond is a three-party contract. The auto dealership is known as the principal, and the obligee is the state licensing authority requiring the bond. A surety company provides the bond to the principal. An Ohio auto dealer bond is guaranteed by the surety company. Legitimate claims are paid by the surety first, and then the licensed auto dealer is required to repay the amount of the claim.
Who Needs an Auto Dealer Bond in Ohio?
Any licensed auto dealer operating in the state of Ohio must have an auto dealer bond that meets surety bond minimums. Ohio auto dealers are required to have a license and the appropriate bond amount posted to the Attorney General’s Office if they engage in the sale of motor vehicles to individuals or businesses in the state.
Ohio Auto Dealer Bond Obligee Information
The Ohio Administrative Code, section 4501;1-3-1 1 gives the Bureau of Motor Vehicles under the Attorney General’s Office to authority to dictate licensing requirements for Ohio auto dealers. One of these requirements is securing an Ohio auto dealer bond, which is submitted to:
Ohio Attorney General
Consumer Protection Section
Attn: TDRF Unit Surety Bond
30 E. Broad Street, 14th Floor
Columbus, OH 43215
What Does an Ohio Auto Dealer Bond Cost?
Licensed auto dealers must have an Ohio auto dealer bond of either $20,000 or $25,000, depending on the type of dealership in operation. With either amount, however, an auto dealer does not need to pay the full bond amount to comply with state requirements. Only a percentage of the bond is required, typically ranging from 1 to 10%.
An Ohio auto dealer bond is priced based on the personal credit history of the auto dealer, as well as business financials and experience in the industry. Negative marks on your credit report, including judgments, liens, or bankruptcy, indicate you are a higher risk to the surety company. To help offset this risk, the percentage of your Ohio auto dealer bond is higher than for someone with excellent or good credit.
How Do I Get an Ohio Auto Dealer Bond?
You can get an Ohio auto dealer bond by submitting a brief form online. The process starts with an initial quote based on the factors listed above. You then submit an application with the surety company and pay for your Ohio auto dealer bond once approved.
Terms and Expiration Date of Ohio Auto Dealer Bonds
Ohio auto dealer bonds are renewable, and they are in place for the same amount of time the auto dealer’s license is effective. There is no stated expiration date for Ohio auto dealer bonds, but these must be renewed in line with an auto dealer’s license to remain in regulation with the law.