What is a South Carolina Auto Dealer Bond?
Auto dealers of new or used vehicles and motorcycles must have a license to operate legally in the state of South Carolina. As part of the licensing process, a South Carolina auto dealer bond is also necessary. This type of surety bond helps ensure a licensed auto dealership is acting in accordance with state rules and regulations dealing with customers. When a dealership customer experiences financial harm due to fraudulent or illegal business practices, a claim can be made against the bond for compensation.
There are three parties involved in a South Carolina auto dealer license: the principal, obligee, and surety. The licensed auto dealer is the principal, while the obligee, the authority requiring the bond, is the South Carolina Department of Motor Vehicles. The surety is the company providing the bond to the dealership, and it pays claims against the bond. However, the auto dealer is required to repay claims.
What Does a South Carolina Auto Dealer Bond Cost?
A South Carolina auto dealer bond of at least $30,000 is required for retail auto dealers. Wholesale and motorcycle dealers must have a bond of at least $15,000. However, the price you pay for a South Carolina auto dealer bond is only a fraction of this amount. You are given a rate for your bond, ranging from 1 to 10%, which is dependent upon several factors.
Surety companies rate your bond premium after evaluating your personal credit score. If you have had issues with money management in the past, such as civil judgments, liens, or missed payments, your credit score reflects this. A low credit score means you are a higher risk for potential bond claims in the future, and therefore, the rate you pay for a South Carolina auto dealer bond is higher.
How Do I Get a South Carolina Auto Dealer Bond?
Securing your South Carolina auto dealer bond takes just a few steps. You can start by submitting a request for a free quote online. You may also apply for a South Carolina auto dealer bond through a short online application form provided by a surety agency.