How much does an auto dealer bond cost in South Dakota?
Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the South Dakota Department of Revenue and Regulation’s Division 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 based on the type of dealer license:
- $25,000 bonds for car dealers and mobile home dealers
- $20,000 bonds for boat dealers
- $10,000 bonds for emergency vehicle and trailer dealers
- $5,000 bonds for motorcycle and snowmobile dealers
The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for South Dakota 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 South Dakota auto dealer bond. EZSurety still offers competitive rates to individuals with low credit scores or other financial issues.
Why are auto dealer bonds important in South Dakota?
South Dakota auto dealer bonds provide protection for customers, creditors, and the state government. When a South Dakota 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 South Dakota Codified Laws, Chapter 32-6B.
If the auto dealer fails to comply with the conditions, 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.
How to get your auto dealer license in South Dakota
To obtain your used auto dealer license in South Dakota, you must meet the Department of Revenue licensing requirements by completing the following steps:
- Complete the dealer license application
- Post the appropriate surety bond
- Provide proof of garage liability insurance
- Meet all zoning requirements
- Install the required signage at the established place of business
- Pay all application and licensing fees