What Is a Maine Auto Dealer Bond?
To legally work as an auto dealer in the state of Maine, individuals and businesses must have a valid auto dealer license. One critical component of obtaining a license is securing a Maine auto dealer bond. This type of surety bond protects consumers from fraudulent or misleading business practices that may lead to financial loss.
Should a licensed auto dealer in Maine fail to comply with the law when conducting business, a claim can be made against the auto dealer's bond. Claims can be expensive for auto dealers as they are responsible for repaying successful claims covered by the bond.
How Does a Maine Auto Dealer Bond Work?
Surety bonds are a three-party contract between the auto dealer, the state, and the surety.
The state agency is the obligee in the contract and they require the auto dealer to secure the bond so that the dealer abides by all state and local laws.
The principal in the contract is the auto dealer who must secure the bond to become licensed in the state.
The surety gives the bond to the principal and pays any successful claims made against the bond. The principal is then responsible for repaying the claim amount to the surety.
Maine Auto Dealer Bond Obligee Details
In Maine, the obligee of any auto dealer bond is as follows:
Department of the Secretary of State
Bureau of Motor Vehicles, Dealer and Agent Services
29 State House Station
Augusta, Maine 04333
Who Needs a Maine Auto Dealer Bond?
Any business or individual engaged in the sale or exchange of motor vehicles is considered an auto dealer in Maine. This activity requires a license and a Maine auto dealer bond.
The amount of the bond required varies depending on the number of vehicles sold throughout the year. Both new and used vehicle dealers must have a bond, as well as motorcycle, equipment, and heavy trailer dealers operating within the state.
How Do You Get a Maine Auto Dealer Bond?
Getting a Maine auto dealer bond begins with a short application submitted online. The surety company reviews the bond amount requested as well as your financial track record to determine a bond quote.
Once the bond premium is paid, a Maine auto dealer bond is finalized and details are sent to the obligee.
How Much Does a Maine Auto Dealer Bond Cost?
Auto dealer bonds are priced based on two main factors: the amount of the bond required and the financial strength and history of the licensed auto dealer applying for the bond.
In Maine, auto dealers that sell up to 50 vehicles per year need a bond of $25,000. Dealers that sell between 51 and 100 vehicles per year need a $50,000 bond. Dealers that sell between 101 and 150 vehicles per year must have a bond of $75,000.
Any Maine auto dealer that sells more than 151 vehicles per year must have a $100,000 auto dealer bond in place.
The amount of the bond is not the price a dealer pays out of pocket. The surety company providing the bond determines the bond premium which ranges from 1 to 10 percent of the bond total.
Can I Get a Maine Auto Dealer Bond with Bad Credit?
The bond premium is based on the financial track record and credit history of the auto dealer. Because the surety company initially pays claims on behalf of the auto dealer, they are extending a form of credit to the business.
Having bad credit history won’t disqualify you from obtaining a bond. Auto dealers with strong financial histories will pay a lower bond premium for their bonds, while dealers with poor financial histories will pay a higher bond premium.
How Do I Renew My Maine Auto Dealer Bond?
Maine auto dealer bonds must be renewed at the same time an auto dealer license is renewed. You’ll receive renewal reminders when it is time to renew your license and your bond, and it is important not to ignore these notices. If you fail to renew your bond, you risk having an invalid bond and operating your business illegally.