What Is a New Mexico Auto Dealer Bond?
Businesses operating as motor vehicle dealers in the state of New Mexico may be required to have a license to run their business legally. One aspect of obtaining an auto dealer license is securing a New Mexico auto dealer bond.
This type of surety bond protects both the customers of the auto dealer and the state from damages they may incur if the auto dealer does not operate in line with state regulations.
A claim can be made against a New Mexico auto dealer bond to provide compensation to any harmed party, and the auto dealer is responsible for repaying successful claims.
How Does a New Mexico Auto Dealer Bond Work?
As with any surety bond, a New Mexico auto dealer bond is a three-party agreement.
The state's licensing agency or authority requiring a bond to be in place is known as the bond obligee.
The principal of the bond is the auto dealer who must secure the bond to operate legally in the state.
The surety company provides the bond and initially pays any successful claims. The auto dealer will pay back the surety for the claims over time.
New Mexico Auto Dealer Bond Obligee Details
In New Mexico, the obligee of an auto dealer bond is as follows:
New Mexico Taxation & Revenue Department
Motor Vehicle Division, Dealer Licensing Bureau
505 Marquette NW, Suite 1501
Albuquerque, New Mexico 87102
Who Needs a New Mexico Auto Dealer Bond?
There are several categories of auto dealers under New Mexico law that require a license and must have a New Mexico auto dealer bond in place. Both new and used auto dealers, as well as manufacturers, wholesale dealers, and motorcycle dealers, must comply with these regulations.
Boat, ATV, trailer, and RV dealers may also be required to secure a New Mexico auto dealer bond.
How Do You Get a New Mexico Auto Dealer Bond?
Auto dealers in New Hampshire can start the bonding process by submitting an application online. The type of bond requested, the amount of the bond, and the financial history of the dealer are part of the application. After reviewing these details, the surety company provides a bond quote and details on how to finalize the process.
How Much Does a New Mexico Auto Dealer Bond Cost?
The cost of a New Mexico auto dealer bond depends on a few factors, including the total amount of the bond required. Most auto dealers must have a bond of $50,000, but motorcycle dealers need a $12,500 bond.
The bond total is not the price an auto dealer pays for a bond in New Mexico. Bond prices are calculated as a small percentage of the bond total, usually ranging from 1 to 10 percent.
An auto dealer must provide information about financial standing and personal credit history to determine where in that range the price falls.
Can I Get a New Mexico Auto Dealer Bond with Bad Credit?
The surety company essentially extends a form of credit to the auto dealer when issuing a bond, so those with a strong financial track record will pay a lower percentage of the bond total. If you have bad credit, you can get an auto dealer bond, but the percentage you pay of the bond total will be higher.
How Do I Renew My New Mexico Auto Dealer Bond?
New Mexico auto dealer bonds must be renewed each year by March 31. If you do not renew your bond by this date, then you risk the chance of invalidating your bond and operating your business illegally. You should receive a renewal reminder each year before your bond expires.