What is an Oklahoma Auto Dealer Bond?
Motor vehicle dealers in Oklahoma must comply with state rules for business licensing in order to operate a legal dealership. One of the requirements for getting an initial business license and maintaining it over time is securing an Oklahoma auto dealer bond. As a type of surety bond, an Oklahoma auto dealer bond provides a safeguard to customers who do business with licensed auto dealers in the state.
Should a business transaction involve misleading information or fraudulent practices, a consumer has the right to file a claim against an Oklahoma auto dealer bond. If a claim is successful, compensation is paid to help cover financial losses caused by the auto dealer.
Who Needs an Oklahoma Auto Dealer Bond?
Not all auto dealers in Oklahoma are required to maintain an Oklahoma auto dealer bond. Under current law, all used and wholesale dealers that engage in the sale or exchange of motor vehicles must have a bond in place. However, new auto dealers do not face a bond requirement.
Oklahoma Auto Dealer Bond Obligee Details
As a surety bond, an Oklahoma auto dealer bond involves three distinct parties. The licensed auto dealer is known as the principal, and the surety company is the provider of the bond to the dealer. The third party, known as the obligee, is the state's licensing authority that requires a bond to be in place. Oklahoma auto dealer bond obligee details are as follows:
Oklahoma Used Motor Vehicle & Parts Commission
421 NW 13th, Suite 330
Oklahoma City, Oklahoma 73103
How Much Does an Oklahoma Auto Dealer Bond Cost?
Similar to other surety bonds, an Oklahoma auto dealer bond varies in price from one dealership to the next. This is because the surety company providing an auto dealer bond bases the cost on the amount of the bond as well as the financial stability of the auto dealer. For used and wholesale auto dealers in Oklahoma, the amount of the bond required is $25,000. However, auto dealers do not pay this entire amount as the price of the bond. Instead, the surety company charges a bond premium, calculated as a percentage of the bond amount.
The bond premium an auto dealer pays ranges from 1 to 10% of the bond total. The percentage is determined by the surety company, based on an evaluation of the auto dealer applying for the bond. When credit history or bond claim history is an issue, a higher bond premium is charged. A healthy financial track record results in a lower bond premium for auto dealers.
How do You Get an Oklahoma Auto Dealer Bond?
Licensed auto dealers can start the process of obtaining their Oklahoma auto dealer bond by submitting a short application online. The surety company reviews the application for the new bond and determines the bond premium. Once the bond premium is paid, and proof of the bond is provided to the obligee, an Oklahoma auto dealer has met the bonding requirement. However, it is important to note that Oklahoma auto dealer bonds need to be renewed every two years, by December 31, to stay compliant with current state laws.