What Is a Connecticut Auto Dealer Bond?
Motor vehicle dealers are one of many professionals operating in the state of Connecticut that must follow specific rules when obtaining a business license. Any dealership or individual involved in the sale or exchange of vehicles must hold a valid license and have a surety bond in place.
The Connecticut auto dealer bond acts as a form of protection for customers of licensed auto dealers. If an auto dealer fails to comply with state laws when conducting transactions with customers, then a claim can be made against a Connecticut auto dealer bond.
A successful claim results in compensation paid to the individual or party involved in the transaction to cover financial losses incurred. Connecticut auto dealer bonds ensure the buying public has some safety net when conducting business with licensed auto dealers.
How Does a Connecticut Auto Dealer Bond Work?
As with other surety bonds, a Connecticut auto dealer bond represents a contract between various parties.
The state's licensing authority requiring the bond be in place is known as the obligee of the bond.
The principal of the bond is the auto dealer who must obtain the bond to be licensed in the state.
The surety company provides the bond to the principal. The surety then pays any successful claims made against the bond, and the principal eventually pays back the claim to the surety.
Connecticut Auto Dealer Bond Obligee Details
Connecticut auto dealer bonds have the following obligee:
State of Connecticut Department of Motor Vehicles
Dealers and Repairers Section
60 State Street
Wethersfield, Connecticut 06161
Who Needs a Connecticut Auto Dealer Bond?
In Connecticut, auto dealers may fall into different categories, depending on the types of vehicles they sell or exchange. Both new and used auto dealers are required to have a Connecticut auto dealer bond in place. Auto repairers and rental or leasing dealers are also required to have a valid bond to conduct business.
How Do You Get a Connecticut Auto Dealer Bond?
Licensed auto dealers in Connecticut may start the process of obtaining an auto dealer bond by submitting a brief online application. The surety company reviews the details of the application, including the bond type, amount, and the financial history of the auto dealer to determine the bond price.
How Much Does a Connecticut Auto Dealer Bond Cost?
The price of a Connecticut auto dealer bond is determined by several different factors, including the amount of the bond that must be secured.
For repairers, a bond of $5,000 is required, while rental or leasing companies must have a $10,000 bond. New and used auto dealers in Connecticut must have a $50,000 bond. Auto dealers and repairers won’t have to pay the entire amount of the bond upfront.
The surety company providing a Connecticut auto dealer bond calculates a bond premium. The bond premium ranges from 1 to 10 percent of the bond total, and this is the amount paid by the auto dealer.
Can I Get a Connecticut Auto Dealer Bond with Bad Credit?
Auto dealers that have a solid financial history and a healthy credit background pay a lower bond premium than auto dealers with a limited or negative financial history. It is possible to obtain an auto dealer bond with bad credit, but the bond premium you pay will be higher because the surety company will consider you higher risk.
How Do I Renew My Connecticut Auto Dealer Bond?
Connecticut auto dealer bonds must be renewed at the same time your auto dealer license renews, which is every two years. You will receive a renewal notice before your bond expires, and it is important to send in your renewal with ample time to spare, so that you don’t risk your bond becoming invalid.