What Is a West Virginia Auto Dealer Bond?
A motor vehicle dealer in the state of West Virginia must have a business license to sell vehicles legally. One part of the licensing process involves posting a West Virginia auto dealer bond.
As a type of surety bond, a West Virginia auto dealer bond helps auto dealers comply with state rules and regulations surrounding the sale or exchange of vehicles.
The requirement to have a West Virginia auto dealer bond provides some peace of mind to consumers that conduct business with licensed auto dealers. If an auto dealer fails to comply with current laws or operates fraudulently, then a claim can be made against the bond to cover financial losses.
How Does a West Virginia Auto Dealer Bond Work?
A West Virginia auto dealer bond is a legal contract that involves three specific parties.
The first party is the state licensing department responsible for managing auto dealer requirements. This party is known as the obligee of the bond.
The second party is the auto dealer required to secure a bond. This party is known as the bond's principal.
The third party is the surety company issuing the bond to the auto dealer. The surety company pays claims against the bond and the principal repays the surety.
West Virginia Auto Dealer Bond Obligee Details
In West Virginia, an auto dealer bond obligee is as follows:
West Virginia Division of Motor Vehicles
PO Box 17100
Charleston, West Virginia 25317
Who Needs a West Virginia Auto Dealer Bond?
Auto dealers in West Virginia are defined as individuals or businesses that sell vehicles for a profit. A license and a corresponding West Virginia auto dealer bond is necessary if your business engages in these activities.
How Do You Get a West Virginia Auto Dealer Bond?
Getting a West Virginia auto dealer bond is a straightforward process. It begins with submitting an application online and providing information about the bond amount, the type of bond, and the financial details needed to determine pricing.
Once the surety company reviews these details, a bond quote is provided. The surety company then requires payment for the bond and provides instructions on how to finalize the bonding process.
How Much Does a West Virginia Auto Dealer Bond Cost?
Auto dealers in West Virginia must post a surety bond of at least $25,000 to comply with current laws. The total amount of the bond required is not the price an auto dealer pays out of pocket. The surety company issuing a bond calculates a bond premium, ranging from one to 10 percent of the bond total for most auto dealers.
The surety company initially covers claims made against a West Virginia auto dealer bond, which means they provide an extended credit to the auto dealer. Because of the risk involved, a check of personal credit and financial stability of the dealership is necessary.
Can I Get a West Virginia Auto Dealer Bond with Bad Credit?
West Virginia auto dealers who have a strong credit history typically pay a lower bond premium than those who have had credit issues in the recent past. Having bad credit won’t disqualify you from obtaining an auto dealer bond, but you should expect to pay a higher premium.
How Do I Renew My West Virginia Auto Dealer Bond?
West Virginia auto dealer bonds must be renewed each year by June 30 to remain compliant with state regulations. You should receive a renewal notice each year before the June 30 deadline. It is important not to miss this deadline so that your bond stays valid.