Car Dealer Bond

The auto dealer bond, also known as a motor vehicle dealer bond, DMV bond, and used car dealer bond, guarantees compliance with:.

The bond takes effect if the dealership is found to be misrepresenting its merchandise, not forwarding sales tax payments to the state or using unethical business practices to sell vehicles, among a host of other offenses.

As a consumer it is in your best interest to ensure that any car dealer you deal with is bonded and licensed. Besides being required by law in most areas, the bond offers you another layer of protection. The bond ensures that the insurance or bond company has proved the dealer as being financially stable.

To prove that he or she is financially stable and can cover any bond premiums and cost, the dealer will be required to fill out an application, submit to a credit check, and provide financial statements.

If a dealer has a less than perfect credit rating, making it more difficult to obtain a bond.