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Who Is Required To Purchase an Auto Dealer Bond In North Carolina?
Every vehicle dealer, including franchised dealers, are required to purchase an auto dealer bond and submit a copy with their application.
Each supplemental showroom (under the same license) is required to purchase an additional surety bond.
A Franchised Dealership is Independent From a Used Dealership
So if you have a franchise license and you want to sell used vehicles, you'll need to purchase an auto dealer bond for the franchise dealership license and a separate bond of the used dealership license.
In the case where you're a franchised and used dealer, supplemental locations for that license are still required to purchase the supplemental location bond.
Why is a North Carolina Motor Vehicle Dealer Bond Required?
North Carolina Motor Vehicle Divisions requires dealerships to get licensed, proving they have:
- Passed the required examinations
- Have the appropriate contracts and agreements in place
- Register their business or business name with the state
- Purchased the minimum levels of liability insurance
And even though obtaining a license is required, it's unfortunate there will be dealerships who will purposefully harm their customers to increase profits:
Examples of customer harm or fraudulent acts include:
- Improperly transferring a title
- Selling vehicles with no title
- Misrepresenting vehicle information like mileage, manufacture year, or condition
- Stealing customer deposits
- Failing to pay the correct sales taxes to the Texas Department of Revenue
The auto dealer bond is the required level of customer protection to be provided by the dealership.
The dealer bond is your commitment, your guarantee, that you will follow the rules and give your customers the best service.
How Much Does a North Carolina Auto Dealer Bond Cost?
North Carolina Motor Vehicle Division requires the following bond coverage amounts (not your price) for dealerships:
- First Location $50,000
- Supplemental showrooms $25,000
| Bond Type | Bond Amount | Get Price Quote |
|---|---|---|
| New Vehicles First Showroom Location | $50,000 | Click for Pricing |
| New Vehicles Secondary Showroom Location | $25,000 | Click for Pricing |
| Used Vehicles First Showroom Location | $50,000 | Click for Pricing |
| Used Vehicles Secondary Showroom Location | $25,000 | Click for Pricing |
The price of each dealer bond requires a quoted rate from a surety. The surety is the insurance company that underwrites surety bonds.
A surety will conduct their own assessment of an applicants risk using primarily these factors:
- The personal credit of the owner or owners
- Business industry and experience
- Prior bond claims if any owner was previously licensed with a bond claim
Because a surety conducts their own independent analysis, the price they quote will be different from other sureties.
This is why it's important to work with a surety agency like Surety Bonds Direct.
We will use our network of A-rated sureties and price shop for you to find the lowest possible price.
Example pricing is shown in the table below. The rates are from really good to about average.
| Bond Amount | Premium Rate | Total Cost |
|---|---|---|
| $50,000 | 0.9% | $450 |
| $50,000 | 1.5% | $750 |
| $50,000 | 2% | $1,000 |
| $50,000 | 3% | $1,500 |
| $50,000 | 4% | $2,000 |
| $50,000 | 5% | $2,500 |
Request a FREE Price Quote Today
Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.
Need Help? Call Us Today
Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950
Don't Wait - Get Your Price
Having Surety Bonds Direct price shop for you, costs nothing.
And once you have your price, you'll be able to make a decision that's best for your business. Price quotes are good for 30 days before they need to be re-quoted.
How Long Does a North Carolina Auto Dealer Bond Last?
Auto dealer bonds in North Carolina have a bond term of 12 months, from the effective date, at which time they'll need to be renewed.
You choose the bond's effective date when you purchase your bond. Typically this would be the day you submit your application to the Division.
Renewing your bond is easy.
Your bond specialist will contact you 30 to 45 days in advance to make sure the renewal premium is paid on time so your bond remains active.
Once you pay the renewal premium, you don't have to do anything else. Your bond is active and you can continue selling vehicles.
What Happens After You Purchase Your Bond
Purchasing a North Carolina auto dealer bond is as easy as completing an online checkout form.
After your purchase, our bond issuance team will prepare your bond with the appropriate signatures, seals, and power of attorney so the Division will accept the bond.
Because it's a legal document, there are strict requirements for how it needs to be filled out. Our issuance team will ensure this is done correctly the first time.
Request a FREE Price Quote Today
Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.
Need Help? Call Us Today
Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950
Motor Vehicle Dealer Bonds And Getting Your North Carolina Business License/Registration
If this is your first time getting licensed in North Carolina, read our past outlining the 9 steps to get your North Carolina auto dealer license.
At a high level, the steps are:
- Secure your salesroom and office
- Meet the dealership requirements including sign requirements
- Register your trade name with the register of deeds
- Obtain the first page of your corporate charter or obtain a certificate of authority
- Purchase your surety bond or surety bonds
- Purchase the minimum liability insurance
- Satisfy the education requirements
- Submit your application
- Pass the post application property inspection
Additional North Carolina Motor Vehicle Dealer Bond Resources & Links
MOTOR VEHICLE DEALER AND MANUFACTURER REGULATION MANUAL
All those applying for license as a motor vehicle dealer, manufacturer, distributor, distributor branch, wholesaler or factory branch license in North Carolina must furnish a corporate surety bond, cash bond or fixed value equivalent in the amount of fifty thousand dollars for one established salesroom and twenty-five thousand dollars for each of the applicant's additional salesroom locations. The amount of the bond for other applicants is fifty thousand dollars for the primary place of business twenty-five thousand dollars for each additional places of business. Surety Bonds Direct completes the bond forms on behalf of the applicants to ensure accuracy and minimize the risk of rejection of the bond by the Division.