What is an Alaska Auto Dealer Bond?
Auto dealers selling new or used vehicles in nearly all states must have a license to operate their business legally. One aspect of the licensing process is securing an Alaska auto dealer bond. An Alaska auto dealer bond is a form of insurance for the state and the customers with which the auto dealer conducts business.
If an auto dealer does not comply with state rules and regulations, then a claim can be made against an Alaska auto dealer bond. Claims are meant to cover financial losses or damages incurred by the customer or the state based on the auto dealer's activities.
How Does an Alaska Auto Dealer Bond Work?
Similar to other surety bonds, an Alaska auto dealer bond is an agreement between three parties.
The obligee is the state authority that requires auto dealers to obtain a bond so that they abide by state and local laws.
The licensed auto dealer is the principal of the bond, meaning they are responsible for securing a bond to remain in compliance with the law.
The surety company provides the bond to the principal and pays the damages of any claim filed. The principal then repays the claim amount to the surety.
Alaska Auto Dealer Bond Obligee Details
For Alaska auto dealers, the obligee information is as follows:
State of Alaska
Division of Motor Vehicles
1300 W Benson Boulevard, Suite 300
Anchorage, Alaska 99503
How do You Get an Alaska Auto Dealer Bond?
If you are a licensed auto dealer in Alaska, you may start the process of securing your auto dealer bond by submitting a brief form online. The surety company will need details about the type of Alaska auto dealer bond required as well as the bond amount.
Once a credit check is complete, a bond premium is quoted and payment can be made.
Who Needs an Alaska Auto Dealer Bond?
Auto dealers operating in the state of Alaska are defined as individuals or businesses who engage in the sale of motor vehicles to consumers. Both new and used auto dealers must comply with auto dealer bond requirements. Motorcycle dealers are also required to post a bond. Boat dealers do not need to be bonded in Alaska.
How Much Does an Alaska Auto Dealer Bond Cost?
Several factors come into play when determining the price of an Alaska auto dealer bond. The surety company that provides the bond to the licensed auto dealer must take into account the total amount of the bond required and the credit history of the individual applying for a bond.
In terms of the amount of the bond, new or used auto dealers in Alaska must secure a $50,000 bond. Motorcycle dealers must have a bond of at least $25,000 to maintain their license. But these bond amounts do not represent the price the auto dealer must pay for the bond.
The bond premium, or the cost of the bond to auto dealers, is calculated as a percentage of the total bond amount. For most auto dealers in Alaska, the bond premium falls between one and 10 percent of the bond total.
Can I Get an Alaska Auto Dealer Bond with Bad Credit?
The percentage paid for the bond premium is based on the credit history of the auto dealer. Those who have bad credit can still obtain an auto dealer bond, but they will pay a higher premium than those who have strong credit.
How Do I Renew My Alaska Auto Dealer Bond?
Auto dealers must renew their Alaska auto dealer bond every two years. The state will send renewal reminders before the bond expires, but if you don’t renew your bond before the expiration date, then you may face penalties for having an invalid bond.