When it comes to surety bonds, auto dealers often have a lot of questions. The first one is usually “Why the heck do I need one?” To be honest, most auto dealers purchase surety bonds simply because they’re prerequisites to getting business licenses. However, the surety bond process goes a lot further than simply allowing auto dealers to meet licensing requirements.
Surety bonds have been used as legally binding guarantees for thousands of years. And even though surety bond regulations have increased significantly throughout the past few decades, auto dealers still know very little about how they work. Upon realizing they need a surety bond, they usually have a lot of questions about purchasing a risk mitigation tool they know nothing about. Following are detailed answers to the top three questions auto dealers ask surety specialists.
1) How do surety bonds benefit my business?
Federal, state and local government agencies enforce a seemingly infinite number of surety bond regulations to help regulate industries and protect consumers. Maintaining the auto dealer bond you need gives your business an upstanding reputation. Failing to do so can mean heavy fines and even license revocation. After purchasing an auto dealer bond, you’ll be able to promote the licensed and bonded status of your dealership, which establishes it as a reputable enterprise.
If you hire employees to sell cars on behalf of your dealership, you might consider an optional surety bond that protects business owners themselves. Employee theft bonds protect against dishonest employees, which gives business owners additional financial security. These surety bonds can be especially beneficial when employees have access to company finances as account managers or through other means. Surety bonds allow business owners to protect against losses while also allowing them to collect reparation when unfortunate circumstances arise.
2) How do surety bonds reassure my customers?
The exact protection your customers will receive from your bond depends on its legal language. The general purpose behind surety bonds is to provide a financial guarantee that a certain level of performance will be achieved. Depending on the bond form used, a surety bond’s guarantee might protect against auto dealers who
use unethical sales tactics
misrepresent their merchandise
fail to produce a valid certificate of title
don’t pay required motor vehicle fees
don’t pay appropriate sales tax
These are just a few examples of the different ways surety bonds provide protection to consumers. By issuing bonds, surety providers offer a financial guarantee of professional work, which will give your clients an additional sense of security. If a dealership or its employees should fail to meet the terms outlined in the surety bond, then harmed parties can make a claim to collect due reparation.
3) How do I get a surety bond for my business?
Because auto dealer bonds are a type of license and permit bond, they can usually be issued in just one day. Auto dealers can find a number of reputable surety providers online and then apply for the needed bond in minutes. A surety bond calculator can even give you an instant price quote while you wait to hear about your application.
Be prepared to give the surety the financial credentials of all the dealership’s owners, including social security numbers and credit scores. Once you’ve discussed your qualifications with a surety specialist, the bond can be written and issued within one day. If you opt for overnight shipping, you can have the bond in your hands within 24 hours and submit it to the agency that’s requiring it right away.
Having a basic understanding of surety bonds will make the purchasing process much easier for auto dealers — and they won’t have to ask as many questions along the way.
This article was written by Danielle Rodabaugh, editor of the Surety Bonds Insider. The publication is sponsored by SuretyBonds.com, a nationwide bond producer. SuretyBonds.com helps auto dealers fulfill licensing requirements every day.