What Is an Arkansas Auto Dealer Bond?
Licensed auto dealers in many states must post a surety bond as part of their ongoing licensing requirements. An auto dealer bond meets this requirement for dealers operating an in-person or online dealership in Arkansas.
An Arkansas auto dealer bond is mandatory because the bond helps protect customers against illegal or fraudulent business practices.
How Does an Arkansas Auto Dealer Bond Work?
When an Arkansas auto dealer bond is in place, it creates a contract between three parties.
The obligee, which is the Arkansas State Police, requires a bond to be posted.
The principal is the auto dealer required to purchase the bond.
The surety company provides the bond to the auto dealer as a form of extended credit. When a customer makes a claim against the bond for financial losses after working with the dealership, the surety company pays the claim. The auto dealer is then responsible for repaying the claim.
Arkansas Auto Dealer Bond Obligee Details
Arkansas law grants licensing authority to the Arkansas State Police Department, making the organization the obligee of Arkansas auto dealer bonds.
Any licensed auto dealer operating within the state must abide by the rules set forth by the obligee and submit licensing forms and documentation along with surety bond information to the department.
Auto dealers in Arkansas may contact the obligee at the address below:
Arkansas State Police
One State Policy Plaza Drive
Little Rock, Arkansas 72209
Who Is Required to Get an Arkansas Auto Dealer Bond?
Any person or business selling five or more motor vehicles within the calendar year is required to meet certain licensing mandates. Part of the licensing obligations for auto dealers in Arkansas involves securing an auto dealer bond to protect the buying public.
Used auto dealers, wholesale auto dealers, auction auto dealers, and franchised auto dealers must post an Arkansas auto dealer bond to comply with licensing requirements.
How Do I Get an Arkansas Auto Dealer Bond?
You can submit a brief application online to get an Arkansas auto dealer bond. After reviewing your credit history and business information, the surety company will provide a quote for your bond and instructions on completing the process.
What Does an Arkansas Auto Dealer Bond Cost?
The cost of an Arkansas auto dealer bond depends on the bond requirement and other financial factors. Used auto dealers in the state must post a bond of $25,000, while new vehicle dealers require a $50,000 bond. Auto dealers only pay a percentage of the total bond amount, which typically falls between 1 and 10 percent.
Can I Get an Arkansas Auto Dealer Bond with Bad Credit?
The cost of an Arkansas auto dealer bond is also based on the personal credit history of the applicant. Auto dealers with high credit scores are lower risks to the surety company providing the bond, while those with bad credit may be higher risks. If you have a bad credit score, you’ll have to pay a higher percentage of the total bond amount.
Renewing an Arkansas Auto Dealer Bond
An auto dealer license issued in Arkansas expires one year from the date it was issued. Auto dealers must renew their license every 12 months, and the auto dealer bond must be renewed at the same time.
The surety company providing the Arkansas auto dealer bond sends renewal information several weeks in advance to ensure licensed auto dealers remain compliant with state laws and regulations.