Different states have very different requirements in terms of their motor vehicle dealer bonds. These bonds are required by state legislation in order to run a car dealership, and it’s essential to understand how they may differ in certain locales, and what may be required of you and your business.
The most obvious way that car dealer bonds will vary in different states and locales is the amount required. A $25,000 bond in Mississippi becomes a $50,0000 bond in Tennessee. Other states come in between, such as Georgia, with a $35,000 bond.
But that’s not the only way that auto dealership bonds can be different from one another. There’s also the matter of renewal term, and expiration date. Bonds are typically made viable for either one or two year periods.
A state may have a set expiration date for renewal, such as Georgia, where their two year term ends March 31st in even-numbered years. Elsewhere, they may simply be renewed at the date when you first got it, as in Tennessee, when their two year term expires the last day of the month of issuance for you.
Another way that your auto dealer bond needs may differ is the type of dealership that you’re running. Certain states don’t differentiate, and just lump everybody in the same category. Other states though very carefully and finely break down dealers into different classifications based upon what they sell.
In Florida, it’s about the type of vehicle. There are half a dozen different dealership licenses with varying needs for bonds, based upon whether you sell used cars, new cars, or both, or different types of vehicle classes, such as recreational vehicles.
In Louisiana on the other hand, they differentiate based upon volume. For dealers who sell less than 120 vehicles in a 12 month period, the bond has a minimum requirement of $20,000. For dealers who sell more than 120 vehicles, the bond is raised to a $35,000 minimum.
Keep in mind that to keep your dealership license in good standing there may be other requirements as well. Many states require garage liability insurance in order to obtain and maintain a dealer’s license. In other states, as opposed to garage liability, it may be a vehicle liability policy.
Be sure to work with an experienced professional who has experience in your local area. He or she should be able to explain to you the requirements for auto dealer bonds in your state, and all of the other specifics and mandates that you need to pay attention to in order to keep your license in good standing, while also fully protecting yourself and your business.