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Rhode Island Auto Dealer Bond

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What Is a Rhode Island Auto Dealer Bond?

Most states require motor vehicle dealers to have a license before opening their doors to the public. One crucial part of the licensing process in Rhode Island is having a valid Rhode Island auto dealer bond. An auto dealer bond protects customers that conduct business with the auto dealer, as well as the state, from unlawful business practices.

Unlike insurance, a Rhode Island auto dealer bond claim pays compensation to the customer or the state's licensing agency should the business fail to meet its obligations under the law.

How Does a Rhode Island Auto Dealer Bond Work?

Surety bonds represent a contract between three different parties.

The Obligee

The state licensing agency responsible for overseeing auto dealers in Rhode Island is known as the obligee of the bond.

The Principal

The auto dealer is responsible for securing a bond and is known as the principal of the bond.

The Surety

The surety company provides the bond to the dealer and initially pays for the claim up to the bond limit, but the auto dealer is responsible for repaying any successful claims over time.

Rhode Island Auto Dealer Bond Obligee Details

In Rhode Island, the obligee of an auto dealer bond is as follows:

State of Rhode Island Division of Motor Vehicles

Dealers' License and Regulation Office

600 New London Avenue

Cranston, Rhode Island 02920

Phone: 401-462-5733

Who Needs a Rhode Island Auto Dealer Bond?

An auto dealer is any individual or business operating in the state of Rhode Island that engages in the sale of motor vehicles. Both new and used auto dealers are required to have a license to do business and a corresponding auto dealer bond.

Motorcycle and moped dealers must also have a license and a Rhode Island auto dealer bond to comply with regulations.

How Do You Get a Rhode Island Auto Dealer Bond?

You can begin the process of obtaining a Rhode Island auto dealer bond by submitting a brief application online. The surety company reviews the amount of the bond as well as your credit history, and based on this information, offers a bond quote. Once the bond is paid for, information is sent to the obligee to finalize the process.

How Much Does a Rhode Island Auto Dealer Bond Cost?

Securing a bond comes at a cost for licensed Rhode Island auto dealers, but in most cases, it is a small amount. The surety company providing the bond looks at the total bond amount required as well as financial aspects of the dealer to determine the cost.

Auto dealers must have a bond of at least $50,000 in place to comply with licensing rules, but this is not the cost of the bond. The price of a Rhode Island auto dealer bond ranges from 1 to 10 percent of the bond total.

Can I Get a Rhode Island Auto Dealer Bond with Bad Credit?

The surety company considers how much risk the auto dealer represents by evaluating the financial standing of the dealership and personal credit score of the auto dealer.

If you have a spotty credit history, including a significant amount of late payments, collections, court judgments, or liens, then you will likely have to pay a higher percentage of the bond total than auto dealers with a healthy credit history.

How Do I Renew My Rhode Island Auto Dealer Bond?

Rhode Island auto dealer bonds must be renewed by December 31 of each year. If you miss the renewal date, your bond can become invalid. You should receive a renewal reminder each year.

Frequent Questions

What does an auto dealer bond cost?

Costs are a percentage of the auto dealer bond amount that's required of you, which is based on your personal credit. Use our bond pricing tool to get a quick ballpark estimate.

Can I get a bond with bad credit?

Yes. You can get approved for a bond regardless of your credit situation. However, the price will increase. You can apply to get an instant approval. As the largest writer of surety bonds in the U.S., we have access to high risk markets that many other agencies do not.

How long does the application take?

It only takes minutes, as we can approve you for your bond instantly online. You can get a no obligation quote on our website at any time.

Can I get auto dealer bond insurance to protect myself?

No. An auto dealer bond does not protect you, it protects the public. However, you can protect yourself or your customers by getting fidelity bonds.

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Jennifer Henson
Our company has been with JW Surety for several years now so when we needed to obtain a bond for a new company, we immediately went to them for help. Our rep, Melissa, was extremely helpful and prompt which made the process extremely easy for me.
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Trying to get a local Surety Bond was like driving a car on three tires. I searched Surety Bonds and found JW Surety Bonds. I got online and filled out the information and with in 30 minutes received a response from Melissa. She was informative, friendly and helpful. One more super satisfied customer.

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About JW Surety Bonds
We are a family owned and operated agency established in 2003. We started with just two people, and grew to become the largest volume bond producer in the nation with 50+ employees. Since day one, our team focus has been on providing real-time online quotes, an easy process, and the best in claims defense. Learn more about our company.