Rhode Island Motor Vehicle Dealer Bonds

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Who Is Required To Purchase a Rhode Island Auto Dealer Bond?

The Rhode Island Division of Motor Vehicles has mostly the same application process regardless of the type of business you're setting up.

The primary license classifications or types of "vehicle dealers" include:

• New and used vehicle dealers
• Scrap/salvage dealers
• Auction dealers
• Vehicle leasing dealers

Because all of these classifications deal with the same application, they also share the same surety bond requirement of $50,000.

This $50,000 dollars is the bond amount and you'll learn more about what this means below.

Why is a Rhode Island Motor Vehicle Dealer Bond Required?

The Rhode Island Division of Motor Vehicles only wants the most qualified businesses operating dealerships. This is why they have a series of licensing requirements and legal regulations that must be met for a license to be issued.

But once the license is issued, the Division can't spend their time policing each dealership throughout the year, so the surety bond is the method the state uses to hold each dealership accountable to the rules and laws in the state.

The surety bond is the primary tool to protect customers and the Division of Taxation.

What Does a Rhode Island Auto Dealer Bond Protect Against?

Even after going through the licensing process, setting up a dealership location, even purchasing or obtaining inventory, every year a small number of licensed dealers will purposefully and financially harm their customers (or the state) to make more money.

Examples of these fraudulent actions can include:

• Improperly transferring a title on sold vehicles
• Selling vehicles with no title or fabricated titles
• Lying about vehicle condition, accident history, or milage
• Stealing from customer deposits
• Switching out vehicles when delivering on sold vehicles
• Failing to pay the correct amount of sales tax on sold vehicles

If a dealership is found guilty of any of these types. of actions, a claim can be made against the dealer bond to compensate for the financial loss.

This is where the $50,000 bond amount comes in. The maximum of any one claim or the total of multiple claims is capped at the $50,000 bond amount.

How Much Does a Rhode Island Auto Dealer Bond Cost?

The price to purchase a $50,000 auto dealer bond is going to be custom from one dealer applicant to the next.

Ultimately the price is determined by a surety, the insurance company that underwrites vehicle dealer surety bonds. The surety will assess an individual or business applicant based on these 3 primary factors:

• The personal credit of the owner or owners if there are multiple owners
• Dealership experience and industry experience
• Any prior bond claims if any owner has been licensed in the past

From their analysis, they will quote a rate they're comfortable with and that rate multiplied by the $50,000 bond amount is the price you'll pay, one time for the bond term.

This assessment is how you can save hundreds of dollars when you purchase your auto dealer bond.

How To Save Hundreds Of Dollars Purchasing Your Bond

We are Surety Bonds Direct, a specialized surety agency, and we'll price shop across our large network of A-rated sureties.

For various internal reasons, each surety will quote a rate that is vastly different from another. We've seen one surety quote a 1% rate while a different one quotes a 3% rate. Same bond, same applicant, vastly different rates.

Here's a table showing you example pricing for the $50,000 Rhode Island auto dealer bond. Again, pay attention to how drastically the pricing changes based on the rate.

It's important to get your specific pricing and the process is easy to start.

Click here and start the online quote process. It takes 90 seconds to submit your request.

And there's no cost to have our bond specialists price shop for you and find you the lowest rate. Plus, once they do, you're under no obligation to purchase from us.

If you prefer to speak with a bond specialist, you can call 1-800-608-9950.

What Happens After You Purchase Your Auto Dealer Bond?

Once you get pricing, purchasing requires completing a standard online order form, or purchasing over the phone.

After you purchase your bond, our issuing department will prepare your bond with the correct:

• Signatures
• Legal seals
• And the required power of attorney

The Rhode Island Division of Motor Vehicles will accept a copy of the bond. This allows us to email you a copy of your bond to you making the process faster.

Renewing Your Auto Dealer Bond

As we mentioned, your bond term is 12 months from the active date you choose when you purchase your bond.

We will manage this process for you. When you purchase, you'll be assigned a bond specialist. They will help manage your account for any new bonds you may need or updates to your current bonds.

As your auto dealer bond expiration date approaches, your bond specialist will call you with pricing ready to go so you can pay the renewal premium and keep your bond active.

The Rhode Island Auto Dealer Bond is Continuous

A continuous bond means the original bond remains active as long as you pay the renewal premium.

This means once you pay the renewal premium, you won't have to submit a new bond to the state.

However, if we can get your lower pricing which requires a new bond, then you'll have to file your new bond. But this is an easy process which we can help with.

Motor Vehicle Dealer Bonds And Getting Your Rhode Island Business License/Registration

Applying for a Rhode Island vehicle dealer bond is very straightforward since there is no separate application process between the different types of license classifications.

At a high level the steps are:

1. Complete the application with your business information
2. Prepare a financial statement with the approved line of credit
3. Submit for a criminal investigation for each owner, partner, and corporate officer
4. Purchase the auto dealer bond
5. Purchase the required minimum amounts of liability and property insurance
6. Show proof of the dealership lease or deed
7. Get additional licensure (second hand license) from your city if required for selling used vehicles
8. Make sure your location passes all of the requirements outlined in the application packet

Click here and start the online quote process. It takes 90 seconds to submit your request.

And there's no cost to have our bond specialists price shop for you and find you the lowest rate. Plus, once they do, you're under no obligation to purchase from us.

If you prefer to speak with a bond specialist, you can call 1-800-608-9950.