What is a West Virginia Auto Dealer Bond?
In the state of West Virginia, a motor vehicle dealer must have a business license in order to sell vehicles legally. One part of the licensing process is to post a West Virginia auto dealer bond. As a type of surety bond, a West Virginia auto dealer bond helps ensure the auto dealer complies 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 a business fails to comply with current laws or operates fraudulently, a claim can be made against the bond to cover financial losses.
Who Needs a West Virginia Auto Dealer Bond?
Similar to many other states, 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.
West Virginia Auto Dealer Bond Obligee Details
A West Virginia auto dealer bond is a legal contract that involves three specific parties. The first is the auto dealer required to secure a bond, known as the bond's principal. The second is the surety company issuing the bond to the auto dealer. Finally, the state licensing department responsible for managing auto dealer requirements is known as the obligee of the bond.
In West Virginia, an auto dealer bond obligee is as follows:
West Virginia Division of Motor Vehicles
PO Box 17100
Charleston, West Virginia 25317
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, however. Instead, the surety company issuing a bond calculates a bond premium, ranging from 1 to 10% of the bond total for most auto dealers.
The surety company initially covers claims made against a West Virginia auto dealer bond. It, therefore, provides a type of extended credit to the auto dealer. Because of the risk involved, a check of personal credit and financial stability of the dealership is necessary. 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.
How do You Get a West Virginia Auto Dealer Bond?
Getting a West Virginia auto dealer bond is a relatively straightforward process. It begins with submitting an application online, 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. It is important to note that West Virginia auto dealer bonds must be renewed each year by June 30 in order to remain compliant with state regulations.