What is a Wisconsin Auto Dealer Bond?
As in many other states, auto dealers operating in Wisconsin are required to have a license before opening their doors. This license comes with a requirement to obtain a Wisconsin auto dealer bond as well, as a way to protect customers interacting with a licensed dealership. If fraud or other illegal activities take place when transacting business, customers who are harmed financially in the process can make a claim against a Wisconsin auto dealer bond.
Auto dealer bonds are a three-party agreement involving a surety company, a principal (the auto dealer), and the obligee (the state authority requiring the bond, the Wisconsin Department of Transportation). The Wisconsin auto dealer bond guarantees that auto dealers will comply with rules set by the Department of Transportation, and that the surety company will pay claims on behalf of the dealer. When a claim is successful, though, the auto dealer is responsible for repaying the claim amount.
What Does a Wisconsin Auto Dealer Bond Cost?
Both new and used auto dealers are required to post a Wisconsin auto dealer bond of $50,000. However, dealers do not have to pay the full bond amount in order to meet this requirement. A Wisconsin auto dealer bond costs a small percentage, between 1 and 10%.
An auto dealer bond rate depends heavily on personal credit score and the business financials of the dealership. Credit history plays a part because the surety company wants to feel confident that the dealer is a low risk for a future bond claim. Poor credit indicates otherwise, and so the cost of a Wisconsin auto dealer bond will be higher if a dealer’s credit history is below standard.
How Do You Get a Wisconsin Auto Dealer Bond?
You can secure a Wisconsin auto dealer bond by applying online. In the process, you receive a free quote based on the factors mentioned above, and the surety company will guide you through the steps for completing the bonding requirement for your auto dealer license.