A Comprehensive Guide to Arizona Motor Vehicle Dealer Bonds
If you’re planning to start a motor vehicle dealership in Arizona, one of the key requirements you’ll need to fulfill is obtaining a Motor Vehicle Dealer Bond. This bond is a type of surety bond tha
t protects consumers and ensures that dealers comply with state laws and regulations. The bond amount varies (see below) and the cost of the surety bond is usually between 1% and 3% of the bond amount.
In this comprehensive guide, we’ll cover everything you need to know about Arizona Motor Vehicle Dealer Bonds, including what they are, why they’re required, how to obtain one, and tips for maintaining compliance.
How to Get an Arizona Motor Vehicle Dealer Bond
At Surety1.com we make it easy to obtain this surety bond. Our simple, three step process is:
- Complete the easy to navigate and secure online application. 1
- Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day.
- Sign some paperwork and pay the bond premium
Once these steps have been completed, the Arizona Motor Vehicle Dealer Bond will be shipped to the bond applicant.
1 -The name of the applicant on the surety bond application must match exactly the full legal business name of applicant for the license.
Surety1.com is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, Surety1.com is the premier online provider of surety bonds nationwide since 2003.
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Required Bond Amount
The required bond amount varies depending on the type of dealer license:
- New and Used Car Dealers: $100,000
- Wholesale Dealers: $50,000
- Motorcycle and Trailer Dealers: $25,000
What is an Arizona Motor Vehicle Dealer Bond?
An Arizona Motor Vehicle Dealer Bond is a legally binding agreement between three parties:
- Principal: The motor vehicle dealer (you).
- Obligee: The Arizona Department of Transportation (ADOT), which requires the bond.
- Surety: The bonding company that issues the bond.
The bond serves as a financial guarantee that you will operate your dealership in accordance with Arizona state laws and regulations. If you fail to comply, consumers or the state can file a claim against the bond to seek compensation for damages.
Why is a Motor Vehicle Dealer Bond Required in Arizona?
The primary purpose of the bond is to protect consumers from fraudulent or unethical practices by motor vehicle dealers. It ensures that:
- Dealers adhere to state laws and regulations.
- Consumers have recourse if they suffer financial harm due to a dealer’s actions.
- The state can hold dealers accountable for violations.
By requiring a bond, Arizona aims to maintain a fair and trustworthy marketplace for vehicle sales.
Who Needs an Arizona Motor Vehicle Dealer Bond?
In Arizona, the following types of motor vehicle dealers are required to obtain a bond:
- New Car Dealers
- Used Car Dealers
- Motorcycle Dealers
- Trailer Dealers
- Wholesale Dealers
- Brokers
If you’re unsure whether your business requires a bond, consult the Arizona Department of Transportation. To contact the Arizona Department of Transportation’s Motor Vehicle Division (MVD) regarding auto dealer licensing, you can call (602) 712-7571 or visit the “Dealer License Types” page on the AZDOT.GOV site.
Term and Renewal
The bond must be active for the entire duration of your dealer license, which typically lasts one year. You’ll need to renew the bond annually to maintain your license.
Cost of an Arizona Motor Vehicle Dealer Bond
The cost of your bond depends on several factors, including:
- Bond Amount: The higher the bond amount, the higher the premium.
- Credit Score: Applicants with good credit typically pay lower premiums.
- Financial History: A strong financial track record can reduce your premium.
- Experience: Experienced dealers may qualify for lower rates.
For example, if you’re a used car dealer with good credit, you might pay 1-2% of the 100,000 bond amount, or $1,000 to $2,000 annually.
What Happens if a Claim is Filed Against Your Bond?
If a consumer or the state files a claim against your bond, the surety company will investigate the claim. If the claim is valid, the surety will pay out up to the bond amount to cover damages. However, as the principal, you are responsible for reimbursing the surety company for any payouts, including legal fees and interest.
To avoid claims:
- Operate your business ethically and in compliance with state laws.
- Resolve customer disputes promptly and professionally.
- Maintain accurate records and documentation.
Tips for Maintaining Compliance
- Stay Informed: Keep up-to-date with Arizona’s motor vehicle laws and regulations.
- Train Your Staff: Ensure your employees understand compliance requirements.
- Keep Accurate Records: Maintain detailed records of all transactions and customer interactions.
- Renew Your Bond on Time: Failure to renew your bond can result in license suspension or revocation. Surety1 will provide bond renewal notices well in advance of the renewal date.
- Work with a Reputable Surety Provider like Surety1.com
Frequently Asked Questions (FAQs)
Q. Can I Get a Bond with Bad Credit?
A. Usually yes, but you may pay a higher premium. Surety1.com specializes in high-risk bonds for applicants with poor credit.
Q. What Happens if I Don’t Get a Bond?
A. Operating without a bond is illegal and can result in fines, license suspension, or even criminal charges.
Q. Can I Cancel My Bond?
A. You can cancel your bond, but you must notify the Arizona Department of Transportation and provide a replacement bond to avoid license suspension. A prorated premium refund may be available.
Q. How Long Does It Take to Get the Bond?
A. The process typically takes 1-2 business days.
Conclusion
An Arizona Motor Vehicle Dealer Bond is a critical requirement for anyone looking to operate a dealership in the state. It not only protects consumers but also helps build trust and credibility for your business. By understanding the bonding process, staying compliant with state regulations, and working with a reputable surety provider like Surety1.com, you can set your dealership up for long-term success.
Ready to secure your Arizona Motor Vehicle Dealer Bond? Contact Surety1 today for a free quote and expert guidance or complete our easy to navigate application for even faster service. Let’s get your dealership on the road to success!
How to Get Your Arizona Motor Vehicle Dealer Bond
- Complete an online application. It’s free and no-obligation.
- One of our surety experts will contact you with a firm quote and an agreement to sign.
- Provide payment and your signed agreement, and then you will receive your Surety Bond!
If you have any questions, please call us at 877-654-2327.
Surety1 was founded in 2003 and helps thousands of clients find the best prices on their surety bonds. We take pride in our work so that we can give you great service. Learn more about Surety1.