Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Michigan Department of Motor Vehicles (DMV) as part of the licensing requirements for car dealerships to conduct business in the state. The DMV sets the total bond amount at $10,000.
The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Michigan auto dealer bonds typically cost between 1% and 3% of the total bond amount.
During the application process, the surety company evaluates your personal credit, financial statements, industry experience, and licensing history. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a Michigan auto dealer bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.
Michigan auto dealer bonds provide protection for customers, creditors, and the state government. When a Michigan motor vehicle dealer posts a surety bond, they provide a guarantee to the bond's Obligee (the DMV) that they will conduct business in compliance with the conditions listed in the Michigan Vehicle Code.
If the auto dealer fails to comply with the code, the surety company will pay out financial losses to damaged parties up to the full bond amount. The auto dealer is liable to reimburse the surety for any damages paid under the bond.
To obtain your auto dealer license in Michigan, you must meet the Michigan DMV licensing requirements by completing the following steps: