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.
Who is Required to Get a Utah Auto Dealer Bond?
Under Utah state laws, auto dealers are defined as individuals or businesses that engage in the purchase or sale of motor vehicles for compensation. Anyone who falls into one of the categories below is considered an auto dealer in Utah and must complete the licensing process as well as secure a Utah auto dealer bond:
- Franchise dealers
- Used auto dealers
- New motorcycle dealers
- Used motorcycle dealers
- Distributor or manufacturer
- Special motor vehicle dealer
Obligee Details for Utah Auto Dealer Bonds
The Utah Motor Vehicle Enforcement Division which operates under the State Tax Commission is responsible for enforcing the laws and regulations imposed on Utah auto dealers. This includes the requirement to post a surety bond as part of an initial or renewal auto dealer license application. As the obligee of Utah auto dealer bonds, the organization’s contact information is listed below:
Utah State Tax Commission
Motor Vehicle Enforcement Division
210 North 1950 West
Salt Lake City, Utah 84314
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.
Utah Auto Dealer Bond Term and Expiration Date
An auto dealer license in Utah expires one year from the date of issue. The Utah auto dealer bond has the same expiration date and must be renewed on or before the license expires. The renewal process for both an auto dealer license and a Utah auto dealer bond is simple, and the surety company that issued your bond provides instructions prior to the bond’s expiration date.