What is a Wisconsin Auto Dealer Bond?
Auto dealers operating in Wisconsin are required to have a license before opening their doors. This licensing process also involves obtaining a Wisconsin auto dealer bond, which protects customers that interact with the 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.
How Does a Wisconsin Auto Dealer Bond Work?
Auto dealer bonds are a three-party agreement between the parties outlined below.
The obligee is the state authority that requires the bond in the licensing process. In this case, the state authority is the Wisconsin Department of Transportation.
The principal is the auto dealer who enters into the agreement because they need the auto dealer bond to become a licensed auto dealer in the state. The auto dealer bond gives their customers protection in the event that a financial mishap occurs.
The surety is the company that provides the bond to the auto dealer at a premium percentage rate. If a dealer breaks the rules, then the surety company pays the claims on behalf of the dealer. When a claim is successful, the auto dealer is responsible for repaying the claim amount.
Obligee Details for Wisconsin Auto Dealer Bonds
In Wisconsin, the obligee for an auto dealer bond is the Department of Transportation. The Dealer and Agent division of the department manages the licensing process and receives information on Wisconsin auto dealer bonds and their renewals.
Auto dealers in Wisconsin submit applications and bond details to the department at the following address:
Department of Transportation
Dealer and Agent Section
PO Box 7907
Madison, Wisconsin 53707
Do I Need a Wisconsin Auto Dealer Bond?
Any individual or business that plans to sell a motor vehicle for profit must hold a valid license as an auto dealer in the state of Wisconsin. Securing a surety bond as an auto dealer is part of the licensing requirements mandated by state law.
Wisconsin auto dealer bonds are necessary for those selling retail, new, or used vehicles. Auto dealer bonds are also required in Wisconsin for wholesale dealers and motorcycle dealers.
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.
What Does a Wisconsin Auto Dealer Bond Cost?
Auto dealers of new and used vehicles must post a Wisconsin auto dealer bond of $50,000, but dealers do not have to pay the full bond amount to meet this requirement. A Wisconsin auto dealer bond costs between 1 and 10% of the total bond amount.
Can I Get a Wisconsin Auto Dealer Bond with Bad Credit?
Your auto dealer bond rate will depend heavily on personal credit score and the business financials of your dealership. Credit history is important because the surety company wants to feel confident that the dealer is a low risk for a future bond claim.
While it still may be possible to get an auto dealer bond with bad credit, the percentage you pay for your Wisconsin auto dealer bond will likely be higher because you are considered higher risk to the surety company.
Renewal of a Wisconsin Auto Dealer Bond
Each auto dealer license issued in the state of Wisconsin expires 12 months after it is issued. While there is no specexpiration date for an auto dealer license or its corresponding bond, renewals need to be completed before the 12-month term ends.
The surety company issuing a Wisconsin auto dealer bond provides renewal details in the few months prior to the end of the term.