How much does an auto dealer bond cost in Delaware?
Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Delaware Division of Motor Vehicles (DMV) as part of the licensing requirements for dealerships to conduct business in the state. The DMV sets the total bond amount at $25,000.
The surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. Premium rates for Delaware 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 Delaware 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 Delaware?
Delaware auto dealer bonds provide protection for customers, creditors, and the state government. When a Delaware 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 Chapter 30 of the Delaware 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.
How to get your auto dealer license in Delaware
To obtain your auto dealer license in Delaware, you must meet the Delaware DMV licensing requirements by completing the following steps:
- Complete the application for a dealer or wholesaler license
- Ensure your place of business and signage comply with DMV regulations
- Provide proof of garage liability insurance
- Post the $25,000 surety bond
- Provide criminal history report for each owner
- Pay all application and licensing fees
Delaware auto dealer licenses expire on December 31st and must be renewed annually.