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.
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.