What Is a Hawaii Auto Dealer Bond?
Several types of businesses must get a valid license in the state in which they operate. In Hawaii, auto dealers are required under current law to have a license and an auto dealer bond. A Hawaii auto dealer bond works as a form of protection for the buying public should the auto dealer fail to comply with rules and regulations.
A Hawaii auto dealer bond provides compensation for customers who conduct business with a licensed auto dealer and experience some form of financial loss.
If an auto dealer is fraudulent in their business dealings or they do not otherwise comply with the law, then a claim can be made against a Hawaii auto dealer bond. Auto dealers are ultimately responsible for repaying these claims.
How Does a Hawaii Auto Dealer Bond Work?
Similar to other surety bonds, a Hawaii auto dealer bond represents a contract between three different parties.
The obligee, such as the state's licensing agency or department, is the party requiring a bond be in place.
The principal is the auto dealer who must purchase the bond to become licensed in the state.
The surety company provides the bond to the licensed auto dealer and initially pays any claims made against the bond. The auto dealer then pays back the surety for the claims.
Hawaii Auto Dealer Bond Obligee Details
For Hawaii auto dealers, a bond's obligee is as follows:
Motor Vehicle Industry Licensing Board
PVL Licensing Branch
335 Merchant Street, Room 301
Honolulu, Hawaii 96813
Who Needs a Hawaii Auto Dealer Bond?
Nearly all types of auto dealers operating in Hawaii are required to secure a Hawaii auto dealer bond. Both new and used vehicle dealers must post a bond, but the amount of the bond is based on the number of vehicles sold each month.
Auto dealers also include motorcycle or scooter dealers, and a bond is also required for these businesses or individuals.
How Do You Get a Hawaii Auto Dealer Bond?
Getting a Hawaii auto dealer bond is a straightforward process that begins with a brief online application. Auto dealers who complete the application receive a quote for the price of the bond and instructions on how to submit any follow-up information.
How Much Does a Hawaii Auto Dealer Bond Cost?
One of the advantages to having an auto dealer bond in Hawaii is that it works as a line of credit or as an alternative to securing assets; however, there is still a cost for a Hawaii auto dealer bond based first on the amount of the bond in place.
New auto vehicle dealers that sell 10 or more vehicles per month must have a $200,000 auto dealer bond. Those that sell less than 10 vehicles per month must have a Hawaii auto dealer bond of $50,000.
Used auto dealers that sell 60 or more vehicles per month need a $100,000 bond, while those that sell less must have a $25,000 bond. Motorcycle and scooter dealers need a $10,000 bond.
Auto dealers do not pay the entire bond amount. The surety company providing the bond charges a percentage of the total bond, typically ranging from 1 to 10 percent.
Can I Get a Hawaii Auto Dealer Bond with Bad Credit?
An auto dealer that is a lower risk to the surety company, meaning they have strong credit and a healthy financial track record, and will pay a lower price for their Hawaii auto dealer bond. If you have bad credit, you can still obtain an auto dealer bond in Hawaii, but you’ll pay a higher percentage of the bond total.
How Do I Renew My Hawaii Auto Dealer Bond?
Hawaii auto dealer bonds must be renewed in June of every even-numbered year to remain valid. You’ll receive a renewal reminder before your bond’s expiration date, and it is crucial that you send in your renewal well in advance so that you don’t risk the hassle of an expired bond.