NORTH CAROLINA MOTOR VEHICLE DEALER BOND
Getting a North Carolina auto dealer bond is a key step to becoming a licensed car dealer in the state. The auto dealer bond serves as an extra guarantee that your dealership will follow all rules and regulations that govern motor vehicle dealers in the state.
Surety Bond Name: North Carolina Auto Dealer Bond
Surety Bond Amount: $50,000 for your first location and $25,000 for each additional location
Obligee: North Carolina Division of Motor Vehicles’ License and Theft Bureau
Just like all surety bonds, the North Carolina auto dealer bond serves as protection for the general public, and not as insurance for your business. In case you don't follow the rules and your obligations under the bond, a claim can be made against you. If proven to be a legitimate claim, the penal sum of the bond is used to compensate the affected parties. The surety covers the costs of claims up front, which you’ll be required to reimburse in full. This means you should avoided having any claims, as they can cause serious harm to your business and finances.
North Carolina Motor Vehicle Dealer Bond
North Carolina Motor Vehicle / Auto Dealer Bond Cost
While $50,000 might seem like a large amount to pay, in reality, you only need to pay a percentage of it to get bonded, which is called the bond annual premium. The surety company will look at several factors to determine your motor vehicle dealer bond cost, most importantly, your credit score. Factors such as years licensed and years of industry experience will also play a factor in your dealer bond cost.
If your credit score is above 650, you’ll likely have to pay between .75% and 2% of the bond amount.
For applicants with credit scores between 600 and 649, the rates range between 2.5% and 4%.
North Carolina Motor Vehicle / Auto Dealer License and Renewal
Whether applying for your first auto dealer license in North Carolina, or renewing an existing one, you have to submit a dealer application form, together with all necessary documents that prove you meet the requirements.
Your first step is to identify what kind of dealer license you need, depending on the type of business you want to run. The most common licenses include new motor vehicle dealer, used motor vehicle dealer, motor vehicle sales representative, manufacturer, factory branch, factory representative, distributor, distributor branch, distributor representative, or wholesaler.
Some of these additional documents include:
Proof of lease or ownership of your retail or wholesaler location
Approval of the location by a License & Theft Bureau agent
Zoning regulation compliance documents
A business sign
Evidence of an assumed name filed with your county’s Registry of Deeds
Comprehensive liability insurance policy
Local and municipal “Traders” licenses
Licensing training if you want to sell used cars
Application fee payment
$50,000 North Carolina dealer bond for your first location, $25,000 for each additional one
After the licensing authority verifies that you’ve fulfilled all the requirements, your application will be processed and approved. For more information, the Motor Vehicle Dealer and Manufacturer Regulation Manual is an excellent resource.
When you renew your license, you’ll have to renew your North Carolina auto dealer bond as well. As your business finances and personal credit score can change, make sure you work on improving those stats, so that you can reduce your surety bond cost over the years.
Common Bond Types: (Many others are available)
North Carolina Mortgage Broker Bond
North Carolina Insurance Broker Bond
North Carolina Irrigation Contractor License Bond