What is an Indiana Auto Dealer Bond?
Any auto dealer operating in Indiana must have a valid license to operate their business legally. Indiana auto dealers must also secure an Indiana auto dealer bond as part of their business requirements.
An Indiana auto dealer bond is a type of surety bond that protects the state and the dealer's customers from fraudulent or misleading business practices. Should a claim be made against an Indiana auto dealer bond, compensation is paid to the state or the customer harmed in the transaction with the auto dealer.
How Does an Indiana Auto Dealer Bond Work?
As a type of surety bond, an Indiana auto dealer bond consists of three main players.
The obligee of the bond is the state's licensing authority that requires the bond be obtained.
The principal of the bond is the auto dealer required to secure a bond as part of the state's licensing requirements.
The surety company provides the bond on behalf of the principal and pays any claims filed against the bond. The principal then repays the claim over time to the surety.
Indiana Auto Dealer Bond Obligee Details
The obligee for Indiana auto dealer bonds is as follows:
Indiana Secretary of State
Indiana Government Center South
302 W Washington Street, Room E018
Indianapolis, Indiana 46204
Who Needs an Indiana Auto Dealer Bond?
As with many states, auto dealers are defined as individuals or business entities engaging in the business or selling or purchasing motor vehicles for a profit.
In Indiana, this includes wholesale dealers, transfer dealers, distributors, manufacturers, auctioneers, and retail dealers. Each type of auto dealer is required to have an Indiana auto dealer bond.
How do You Get an Indiana Auto Dealer Bond?
To get started with an Indiana auto dealer bond, a brief online application can be submitted. The surety company needs information about the bond type and amount required, as well as financial details for the auto dealer. Once these details are reviewed, a quote is provided for the Indiana auto dealer bond.
How Much Does an Indiana Auto Dealer Bond Cost?
All auto dealers in Indiana must post an auto dealer bond of no less than $25,000, regardless of the type or amount of vehicles sold, but the total bond amount is not the price paid for an Indiana auto dealer bond.
The out-of-pocket cost for a bond, known as the bond premium, is calculated as a percentage of the bond total. The bond premium typically ranges from one to 10 percent of the $25,000 bond amount.
Can I Get an Indiana Auto Dealer Bond with Bad Credit?
Indiana auto dealers must undergo a credit check to determine the price of the bond premium. A credit check is required because the surety company takes on risk when issuing a new bond.
If an auto dealer has a questionable financial track record or bad credit, the bond premium may be higher than an auto dealer who has a strong credit history.
How Do I Renew My Indiana Auto Dealer Bond?
Each auto dealer bond is issued for a one-year term, and it must be renewed every year if the auto dealer wants to remain compliant with state laws. The state will send out renewal reminders before your bond’s annual expiration date, and it is your job to ensure you submit your renewal before it expires.