What is a Mississippi Auto Dealer Bond?
Auto dealers doing business in Mississippi are required to obtain a license through the state. The licensing requirements include posting a surety bond, known as a Mississippi auto dealer bond. This type of bond offers protection to customers of an auto dealership. If a dealer engaged in fraudulent or illegal activity when selling new or used vehicles, the affected customer can make a claim against the Mississippi auto dealer bond for compensation to cover losses.
A Mississippi auto dealer bond is a three-party contract among the principal required to post a bond, the surety company providing the bond, and the obligee requiring the bond.
Who Needs a Mississippi Auto Dealer Bond?
The Mississippi code defines an auto dealer as any individual or entity that participates in the purchase or sale of motor vehicles for a profit, regardless of how many vehicles are purchased or sold throughout a calendar year. Motor vehicles may include new or used vehicles, motorcycles, and certain trailers or recreational vehicles. An auto dealer license with a Mississippi auto dealer bond is required to operate legally within the state for anyone who engages in these business practices.
Mississippi Auto Dealer Bond Obligee Information
Under Mississippi law, the Department of Revenue through the Motor Vehicle Commission acts as the obligee for Mississippi auto dealer bonds. All licensed auto dealers operating in the state must abide by bond requirements set forth by state regulations. This includes providing the initial license details and bond information to obligee before opening their doors for business. These details are submitted to the obligee at the address below:
Mississippi Department of Revenue
Motor Vehicle Commission
PO Box 1140
Jackson, Mississippi 39215
What Does a Mississippi Auto Dealer Bond Cost?
Licensed dealers in Mississippi must post a bond of $25,000 per location. Mississippi auto dealer bond pricing is only a fraction of this amount, however. Most auto dealers pay between 1 and 5% of the bond total, based on several different factors.
The surety company providing a Mississippi auto dealer bond evaluates a dealer’s personal credit score and business financials to determine the price of the bond. Adverse credit due to financial issues such as bankruptcy, civil judgments, or liens leads to a higher bond cost, potentially up to 10% of the bond total. Auto dealers with a high credit score and a clean credit report pay less because they are a lower risk to the surety company.
How Do I Get a Mississippi Auto Dealer Bond?
Licensed auto dealers can begin the process of getting a Mississippi auto dealer bond by submitting a quick online application. The surety company reviews your business details and credit information and then provides a quote for your bond.
Expiration Date and Terms for Mississippi Auto Dealer Bonds
Licensed auto dealers in Mississippi must renew their license each year, although no specific expiration date is given. In line with license renewals, Mississippi auto dealer bonds must also be renewed. This process is simple, as the surety company provides a timely reminder of when the auto dealer bond is up for renewal.