What is a Pennsylvania Auto Dealer Bond?
Any car dealer operating in the state of Pennsylvania must hold a valid license to do so. In addition to an auto dealer license, a Pennsylvania auto dealer bond is also a requirement. The auto dealer bond works as a guarantee that licensed dealerships will interact with customers and transact business according to state laws.
Like other surety bonds, a Pennsylvania auto dealer bond is an agreement between three parties. The principal, the auto dealership, is the party responsible for obtaining a bond. The surety provides the bond to the principal. The obligee, the Pennsylvania Bureau of Motor Vehicles, requires an auto dealer bond as part of the licensing process.
What Does a Pennsylvania Auto Dealer Bond Cost?
Licensed auto dealers selling either new or used vehicles need to obtain a Pennsylvania auto dealer bond of at least $20,000. However, dealers are not required to pay the full amount to secure the bond. Instead, bonds are priced as a percentage of the total, usually ranging from 1 to 10%.
The surety company calculates the price you pay for a Pennsylvania auto dealer bond based on your personal credit score and business financial standing. A low credit score, below 599, may indicate that you are a high risk of a future bond claim. Because claims are paid by the surety but then repaid by you as the auto dealer, having bad credit increases the cost of your auto dealer bond.
How Do You Get a Pennsylvania Auto Dealer Bond?
You can get a Pennsylvania auto dealer bond by submitting a short form online. A free quote is provided based on your personal and business details, and the surety company will work with you to complete your application and the bonding process for your auto dealer bond.