07

Jul

People are quite skeptic about high-investment purchases. Property, insurance programs, vehicles – these are long-term contributions. A buyer needs assurance that the purchase is in their best interest.

So it would not come as a surprise if we told you that that your reputation as an automobile dealer has to be well-founded to instill trust in potential customers.

They need to know that the dealership they are collaborating with is accepted in the industry. And surety bonds are a sure-fire way to do that.

You know that you have a legal obligation to gain a car dealer bond. But do you know what purposes this surety bond serves to you and your business?

Car Dealer Bonds And Licensing

Let’s start with the basics – realizing the legality of surety bonds. Auto dealers in majority of the 50 states are required by the government to file surety bonds prior to receiving their dealership license. A car dealer bond is a permit of sorts that supports industry rules and regulations.

Without an acceptable form of proof like a surety bond, dealers are not licensed.

Understand the terms of the bond you purchase. It is a binding contract and you may be contractually required to fulfill some tasks per industry standards, relevant to the state the bond is issued in.

Car Dealer Bonds And Customers

Being bonded is an official way of telling your customers that they are protected. They know that an approved car dealer bond agency has thoroughly evaluated and re-evaluated your dealership.

Since attaining a car dealer bond requires complete credit score and financial checks, it has been concluded that you are dependable enough to be bonded. This knowledge is good enough to prompt customers to make a large investment in a vehicle provided by you, without doubts regarding your, or the car’s reputation.

Additionally, a surety bond means you are guaranteeing a sound car with a clean and clear title. The public should know that if they make a claim against you, its validity will result in complete compensation. Of course, you want to avoid such a scenario, but it is beneficial for all parties involved to have some assurance that it will not.

Car Dealer Bonds And Claims

Speaking of claims, do not assume that a car dealer bond is insurance for your business.

In the event that a claim against your dealer bond does prove to be valid, you will have to pay up the surety costs that your bonding company fulfills. So it is necessary you avoid claims by adhering to the terms of any contracts you signed, including those of your surety bond, legal license and dealer-customer agreements.