What is a Massachusetts Second Hand Motor Vehicle Dealer Bond?
The Massachusetts Second Hand Motor Vehicle Dealer Bond is a surety bond required for individuals who operate used motor vehicle dealerships within the state. While the local municipality in which the auto dealer operates is responsible for overseeing the business, the Massachusetts Registry of Motor Vehicles (RMV) is the ultimate state authority in this matter. Essentially, the city/county you operate in will require you to get a dealer license. However, the state requires every dealer to provide proof of a $25,000 surety bond in order to get their license.
The MA Motor Vehicle Dealer Bond functions similarly to other surety bonds in that it is an agreement between the obligee, the principal, and the surety company. The obligee is the entity that requires the bond, while the principal refers to the business or individual that needs the bond.
The surety bond ensures that the principal will perform according to their licensing regulations and state laws. In the event that an injured individual or party files a claim against the principal’s bond, the surety company will complete an investigation into the validity of the claim. If the claim is valid, the surety will compensate the injured individual(s) up to the bond amount. Ultimately, it is the responsibility of the principal to reimburse the surety for any damages paid, plus additional fees and expenses incurred while investigating the claim.
A valid claim, for instance, could be the result of fraud, deceptive practices, negligence, or even the sale of stolen vehicles. Accordingly, the principal is bound by the bond to comply with all regulations. For a more in-depth look at surety bonds as a whole, check out our detailed guide here.
Who has to get this bond?
Motor vehicle dealers applying for a Massachusetts RMV dealer license, specifically a Class II license for used car dealers, are required to obtain the Second Hand Motor Vehicle Dealer Bond.
The Massachusetts General Laws (Section 58: Classes) specify that a Class II license covers individuals whose business involves the purchase or sale of used motor vehicles that they do not own, under an agreement in which the dealer receives compensation.
Regardless of the date of issue, the surety bond expires on January 1 and must be renewed every year, as long as the business continues to operate.
How much does this bond cost?
Massachusetts used motor vehicle dealers must obtain a bond amount of $25,000; however, this is not how much your bond will cost. Fortunately, only a small percentage of this bond amount, called the premium, is what you will pay for your bond. Your premium rate will be determined by your credit score, industry experience, and business financials.
If you have optimal credit, rates can start as low as 1% of the bond amount. Even if you have nonstandard credit, we encourage you to apply for your bond. At EZ surety Bonds, we work with a variety of sureties to find you the best quote available.
Obligee information
The obligee is the authority that requires the dealer bond. While the Massachusetts RMV dealer license is issued by the municipality in which the dealer operates, the Massachusetts Registry of Motor Vehicles (RMV) is considered the obligee for the dealer bond. Their contact information is as follows:
Massachusetts Department of Transportation
Registry of Motor Vehicles
PO Box 55889
Boston, MA 02205
Phone: +1 800-858-3926
How to get your Massachusetts Second Hand Motor Vehicle Dealer Bond
Applying for a bond with EZ Surety Bonds is quick and, well, easy; regardless of the bond you need. To obtain your MA Second Hand Motor Vehicle Dealer Bond, simply fill out our quick online form, and one of our friendly surety experts will contact you regarding your free quote within 24 hours. Following the payment and receipt of your bond, you can file it with the obligee, the Massachusetts Registry of Motor Vehicles.
Our surety experts are always happy to assist. If you have any questions, please contact bonds@southcoastsurety.com or call 1-800-361-1720.
Frequently asked questions
How to become a licensed dealer in Massachusetts
To receive your Massachusetts RMV dealer license, you must complete the following steps:
- Determine the dealer license type as Class I (new and used), Class II (only used), or Class III (salvaging parts).
- Complete the required documentation for each license type.
- Obtain the MA Motor Vehicle Dealer Bond.
- Complete your dealer license application, which may vary by municipality. Consult your local municipality for more information.
- Pay the licensing fee, which will vary from $100 to $200 based on location.
Generally, the license can take up to two months to be approved. Massachusetts dealer licenses are renewed annually. If you are a Class II dealer, you must renew your surety bond annually along with your license.
Read our guide here for a more detailed explanation of the process of obtaining your Massachusetts Dealer License.
How much is a Second Hand Motor Vehicle Dealer Bond in Massachusetts?
Second-hand motor vehicle dealers in Massachusetts are required to secure a $25,000 bond. However, the premium rate is determined by factors, such as the applicant’s credit score, industry experience, and financial standing. We work with a variety of surety markets to offer competitive quotes. Because the credit check will not hurt your credit score, we encourage you to apply for your bond anyway, even if you have nonstandard credit. Simply apply on our website today, and one of our surety experts will contact you regarding your free quote within 24 hours.
After I purchase my bond, what do I do?
After you purchase the bond, we will mail the original document to you. Most obligees require you to file the original bond with them (usually signed by the principal), although some obligees may approve of an electronic copy. Every obligee has their own unique filing requirement, so be sure to confirm the filing requirements of your obligee before doing anything with your bond.
