As a prospective car buyer, it is your legal right to ensure an auto dealer holds a bond. We highly recommend checking an auto dealer’s license and bond before considering their business. This bond protects consumers, regardless of how you paid or whether the vehicle is new or used. Bonded auto dealers ensure honest and legal business transactions, as well as compensation if the dealer fails to uphold standards.
An auto dealer bond protects consumers from illegal and unethical acts. When signing a bond, an auto dealer legally binds themselves to the state DMV and the public. This bond states the auto dealer keeps from fraudulence or misconduct within the business industry. If the dealer acts against the bond requirements (fraudulence or misconduct), the consumer may file a claim on the bond. The auto dealer must pay the cost of the claim, up to the bond amount limit.
Let’s say an auto dealer holds a $50,000 bond and sells a car for $15,000. The dealer falsely claims their mechanic thoroughly checked the car and reports it in excellent condition. The buyer of the car realizes that the car does not run properly and files a claim against the dealer’s bond. In this case, the dealer is at fault for intentionally misrepresenting the car. Since the bond amount caps at $50,000, the surety company carrying the bond refunds the buyer $15,000. In turn, the auto dealer repays the surety company for the paid claim.
If you are an auto dealer and need a bond, apply here: https://surety1.com/motor-vehicle-dealer-bond-application/