How much does an auto dealer bond cost in Indiana?
Auto dealer surety bonds (also called motor vehicle dealer bonds) are mandated by the Indiana Secretary of State as part of the licensing requirements for car dealerships and distributors to conduct business in the state. The Secretary of State 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 Indiana 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 an Indiana 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 Indiana?
Indiana auto dealer bonds provide protection for customers, creditors, and the state government. When an Indiana motor vehicle dealer posts a surety bond, they provide a guarantee to the bond’s Obligee (the Secretary of State) that they will conduct business in compliance with the conditions listed in the Indiana 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 Indiana
To obtain your auto dealer license in Indiana, you must meet the Indiana auto dealer services division licensing requirements by completing the following steps:
- Complete an application for dealer licensing
- Obtain a registered retail merchant certificate
- Post the $25,000 surety bond
- Complete a criminal background check
- Pay all application and licensing fees