What is a Virginia Auto Dealer Bond?
In the state of Virginia, vehicle dealerships are required to follow certain licensing rules in order to comply with current laws. One of the requirements necessary to be licensed as an auto dealer involves obtaining a surety bond, known as a Virginia auto dealer bond. This surety bond helps protect the buying public from fraudulent or illegal business practices that may cause financial harm.
If a licensed auto dealer in Virginia fails to conduct business in line with state regulations, a claim can be brought against the auto dealer's bond. Successful claims result in compensation paid to the complaining party to cover damages they incurred due to the auto dealer's actions.
Who Needs a Virginia Auto Dealer Bond?
Auto dealers in Virginia may sell or exchange new or used vehicles with the proper license. Both new and used dealers are required to have a Virginia auto dealer bond, regardless of how many vehicles they sell or exchange each year.
Virginia Auto Dealer Bond Obligee Details
Surety bonds represent a contract between three parties, known as the principal, the obligee, and the surety company. The principal is the licensed auto dealer required to secure a bond, and the surety company provides the bond to the principal. The obligee is the state's licensing authority responsible for overseeing auto dealers operating within Virginia.
In Virginia, the auto dealer obligee is as follows:
Virginia Motor Vehicle Dealer Board
2201 W Broad Street, Suite 104
Richmond, Virginia 23220
How Much Does a Virginia Auto Dealer Bond Cost?
Virginia auto dealer bonds are priced similarly to other surety bonds. The cost is determined by the total amount of the bond required by the obligee, and other factors specific to the auto dealer applying for the bond. For both new and used auto dealers in Virginia, a bond of $50,000 is required by law. Fortunately, licensed auto dealers do not have to pay this entire amount to obtain a bond.
Instead, the surety company prices a Virginia auto dealer bond as a percentage of the bond amount. This percentage, known as the bond premium, ranges from 1 to 10% of the bond total. When an auto dealer applies for a Virginia auto dealer bond, the surety company providing the bond reviews financial details of the dealership or individual. A poor financial history, including a low credit score or spotted credit history, results in a higher bond premium. Auto dealers with a strong credit history pay a lower premium for their Virginia auto dealer bond.
How do You Get a Virginia Auto Dealer Bond?
Obtaining a Virginia auto dealer bond is a straightforward process. Auto dealers can submit a brief online application to request a bond price, based on the amount of bond they need and their financial standing. Once the surety company reviews these details, a bond premium is provided as well as steps for completing the process. Virginia auto dealer bonds must be renewed at the same time that the auto dealer license renews.