What Is a Virginia Auto Dealer Bond?
Vehicle dealerships in the state of Virginia must follow certain licensing rules to comply with current laws. One of the requirements for licensure as an auto dealer involves obtaining a Virginia auto dealer bond. This surety bond protects the buying public from fraudulent or illegal business practices that may cause financial harm.
If a licensed auto dealer in Virginia fails to conduct business in line with state regulations, then a claim can be brought against the auto dealer's bond. Successful claims result in compensation paid to the complaining party to cover damages they incurred due to the auto dealer's actions.
How Does a Virginia Auto Dealer Bond Work?
Surety bonds represent a contract between three parties, known as the principal, the obligee, and the surety company.
The obligee is the state's licensing authority responsible for overseeing auto dealers operating within Virginia.
The principal is the licensed auto dealer required to secure a bond.
The surety company provides the bond to the principal and pays claims when they arise. The principal must repay the claims to the surety.
Virginia Auto Dealer Bond Obligee Details
In Virginia, the auto dealer obligee is as follows:
Virginia Motor Vehicle Dealer Board
2201 W Broad Street, Suite 104
Richmond, Virginia 23220
Who Needs a Virginia Auto Dealer Bond?
Auto dealers in Virginia may sell or exchange new or used vehicles with the proper license. Both new and used dealers are required to have a Virginia auto dealer bond, regardless of how many vehicles they sell or exchange each year.
How Do You Get a Virginia Auto Dealer Bond?
Obtaining a Virginia auto dealer bond is a straightforward process. Auto dealers can submit a brief online application to request a bond price, based on the amount of bond they need and their financial standing. Once the surety company reviews these details, a bond premium is provided as well as steps for completing the process.
How Much Does a Vermont Auto Dealer Bond Cost?
Virginia auto dealer bonds are priced similarly to other surety bonds. The cost is determined by the total amount of the bond required by the obligee and other factors specific to the auto dealer applying for the bond.
For both new and used auto dealers in Virginia, a bond of $50,000 is required by law. Licensed auto dealers do not have to pay this entire amount to obtain a bond. The surety company prices a Virginia auto dealer bond as a percentage of the bond amount.
This percentage is the bond premium, and it ranges from 1 to 10 percent of the bond total.
Can I Get a Virginia Auto Dealer Bond with Bad Credit?
When an auto dealer applies for a Virginia auto dealer bond, the surety company providing the bond reviews financial details of the dealership or individual. A poor financial history, including a low credit score or spotty credit history, results in a higher bond premium. Auto dealers with a strong credit history pay a lower premium for their Virginia auto dealer bond.
How Do I Renew My Virginia Auto Dealer Bond?
Virginia auto dealer bonds must be renewed at the same time that the auto dealer license renews. Regardless of when your renewal date occurs, you’ll receive a renewal reminder from the surety company; that way, you won’t risk invalidating your bond.