The New York Department of Motor Vehicles (DMV) requires motor vehicle dealers to obtain a surety bond before operating in the state. A surety bond is a three-party contract between the principal (the dealer), the obligee (the New York DMV), and the surety company that writes the bond.
Along with being a requirement for obtaining a New York auto dealer license, the bond ensures that the licensed dealer will operate in accordance with all regulations relevant to their trade. If the licensed dealer commits a fraudulent or illegal act, causing injury to someone, the injured party can file a claim against the dealer’s bond. If the surety company finds the claim valid, they will compensate the injured party up to the bond amount. The dealer is financially responsible for reimbursing the surety for any claims paid out, plus additional fees and expenses incurred.
Essentially, any new or used car dealer in New York who advertises motor vehicles for sale or lease, displays them for sale or lease, and sells or leases them within the state has to obtain the auto dealer bond as a business licensing requirement.
As per New York Consolidated Law Section 415, auto dealers operating in the state must obtain a motor vehicle dealer license accompanied by a New York Auto Dealer Bond. The New York legislature enacted these licenses and regulations to ensure dealers adhere to fair business principles and pay required fees and taxes owed to the state.
The New York New or Used Motor Vehicle Dealer Bond will vary in bond amount based on the license classification and the number of vehicles the dealer sold the previous year. However, the bond amount typically ranges between $20,000 and $100,000.
The following can help you determine your required bond amount:
In most cases, dealers only have to pay a fraction of their bond amount as a premium, determined primarily by their credit (using a soft pull). Applicants with excellent credit may see quotes starting around 1% of the bond amount.
However if you have nonstandard credit, we still encourage you to apply. At EZ Surety Bonds, we work with several surety companies to try to find you the best rate available. Even though your free quote will require a credit check, it won’t harm your score.
The obligee, which is the entity that requires the NY New or Used Auto Dealer Bond, is the New York Department of Motor Vehicles (DMV). Their contact details are below:
New York State Department of Motor Vehicles
Bureau of Consumer & Facility Services
P.O. Box 2700
Albany, NY 12220
Our surety bond application process is quick and easy. To get started, complete the short application form on our website for the bond you need. Once you complete your application, one of our friendly surety experts will reach out to you within 24 hours regarding your quote.
How to become a licensed car dealer in New York?
To obtain your New York car dealer license, you must complete the following steps:
This is only a brief outline and may not be all-inclusive. For a more detailed step-by-step process on getting your New York car dealer license, check out our guide here.
How much is a New or Used Motor Vehicle Dealer Bond in New York?
The NY New or Used Auto Dealer Bond amount typically ranges from $20,000 to $100,000, depending on the license classification and the number of vehicles sold the previous year. Regardless of your credit score, we aim to find you the most competitive quotes. Getting your free quote is as easy as filling out the quick application form on our website today.
After I purchase my auto dealer bond, what do I do?
Once you’ve purchased your bond, the original bond gets shipped out to you. Every obligee has unique requirements regarding the bond filing process. Some obligees require you to mail them the original document, signed by the principal, while others approve of an electronically filed bond.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.