What is a Utah Auto Dealer Bond?
Like nearly all states, Utah requires auto dealerships to have a valid license in order to do business legally. Part of the licensing requirements includes posting a Utah auto dealer bond which provides certain protections to customers doing business with the dealership. If fraudulent activity or illegal business practices take place, or if a dealership fails to comply by state laws, a claim can be made against the bond.
A Utah auto dealer bond involves the obligee requiring the bond, which is the Utah Motor Vehicle Enforcement, the surety company providing the bond, and the principal required to secure a bond. Surety bonds work as a form of extended credit to the principal, covering bond claims when they arise. Claims are then repaid by the principal, and this makes it essential to operate in line with state regulations to keep claims to a minimum.
What Does a Utah Auto Dealer Bond Cost?
New and used auto dealers in Utah are required to post a bond of $75,000 in order to meet licensing rules. A $10,000 bond is necessary for motorcycle and small trailer dealerships. However, the total bond amount does not fall on the shoulders of the licensed auto dealer. Instead, a Utah auto dealer bond is priced as a percentage of the bond amount, usually ranging from 1 to 10%.
The percentage you pay for a Utah auto dealer bond, known as the bond premium, is calculated based on your personal credit score and other financial information related to the business. If you have a low credit score or a credit history that includes bankruptcy, lien, or civil judgment, you will pay a higher bond premium.
How Do I Get a Utah Auto Dealer Bond?
You can start the process of obtaining a Utah auto dealer bond by submitting a short online application.