Virginia Motor Vehicle Dealer Bonds

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Who Is Required To Purchase a Virginia Auto Dealer Bond?

In the big picture, Virginia licenses:

• Franchise dealers
• Independent dealers

Both of these types of dealers include selling vehicles such as:

• Cars
• Motorcycles
• Trailers
• Recreational vehicles
• Ambulances
• Funeral vehicles
• Fire-fighting vehicles

And both types of license classifications are required to purchase an auto dealer bond in the amount of $50,000.

What makes Virginia unique compared to many states is the surety bond only has to be renewed for the first 3 years of the business's existence.

In most circumstances you can let your bond expire, unless the Motor Vehicle Dealer's Board requires you to maintain your bond for a longer period of time.

The Virginia Motor Vehicle Transaction Recovery Fund

Virginia established a recovery fund for customers who have received a judgement against a dealership that committed fraud but failed to pay the judgement.

Each dealership is required to pay $350 per year for the first 3 years of the dealership and $100 one time fee per additional location.

The Board may require additional yearly $100 payments from each dealer depending on the Recovery Fund's balance.

If you choose to opt out of any future payments to the fund, you can purchase a $100,000 surety bond provided you've gone through three straight years of no claims.

Virginia Auto Dealer Bond Amount Overview

Why is a Virginia Motor Vehicle Dealer Bond Required?

Virginia has a detailed motor vehicle dealer licensing process with the goal of ensuring only reputable and qualified businesses obtain a license to serve the Virginia public.

This licensing process includes requirements such as:

• Meeting the dealership location requirements
• Providing the franchise agreement if you're a franchised dealer
• Obtaining the correctly zoning approval
• Licensing salespersons
• Completing a criminal background check

And you must purchase a surety bond as one of these requirements that must be met before you can submit your license for approval.

As we've mentioned, this surety bond is a guarantee that you will follow the laws in Virginia and service your customers with ethical business practices.

In simple terms, you purchase this surety bond for the protection of your customers and the state.

What Does a Virginia Auto Dealer Bond Protect Against?

It is expensive setting up a dealership and meeting all of the licensing requirements. And it doesn't seem reasonable that a dealership would willingly commit fraud, but every year there are dealerships who do.

These fraudulent acts can include:

• Improperly transferring a title for sold vehicles
• Selling vehicles with no title or fake titles
• Lying about vehicle condition, accident history, or milage
• Stealing 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 one of these or similar actions, besides the legal issues, the customer can make a claim against the $50,000 dealership surety bond for financial compensation.

This $50,000 is the maximum allowed compensation for a single claim as well as a scenario where there might be multiple claims.

How Much Does a $50,000 Auto Dealer Bond Cost?

Both the $50,000 and the $100,000 auto dealer bonds are credit driven bonds. This means that the price is going to be custom based on the individuals who comprise ownership in your business.

This custom price will be determined by a surety. A surety is an insurance company that underwrites these auto dealer bonds.

Each surety performs their own independent analysis of an applicant, primarily using these three factors:

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

Based on these factors, the surety will quote their rate and this rate multiplied by your bond amount ($50,000) is the price you'll pay.

The thing is, different sureties will come back with vastly different rates. We routinely see one to three percentage points difference.

This means you can save hundreds, even thousands of dollars.

Why Use Surety Bonds Direct To Purchase Your Bond?

This is what we do at Surety Bonds Direct. It's our job to price shop for you can find the lowest possible rate and price for your bond.

We are a specialized agency and we work with a large network of sureties to find our clients the lowest possible price.

Let's look at some price examples so you can get an idea of how much money you can save.

Here's a table showing you examples of pricing for $50,0000 auto dealer bond. Notice the pricing changes based on one to two percentage points in the rate.

The price you pay is one payment for a bond term of 12 months. More on this in the next section.

To have us get you exact pricing costs you nothing. We just want the opportunity to earn your business by helping you pay as little as possible.

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

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 purchase your bond, our issuance team will prepare your bond because it must be on a specific form the Motor Vehicle Dealer's Board expects.

Your bond will be made official with the:

• Required signatures
• Legal seals
• And a power of attorney

The Virginia Motor Vehicle Dealer's Board will accept a copy of the bond. This means we can email a copy of your bond to you, speeding up the process.

Once you get your bond you just need to print it out, sign it, and submit the signed copy with your application packet.

Renewing Your Auto Dealer Bond

As we mentioned when you purchased your bond, it's one payment for 12 months.

The start date for your bond is chosen when you purchase your bond.

As your bond expiration date approaches, your bond specialist will begin reaching out to you 30 to 45 days in advance to remind you about the expiration date and to help get your bond renewed.

Your bond specialist will have low pricing already available making the renewal process seamless.

Once you pay the renewal premium, your bond remains active. There's no additional paperwork.

And after three years you can let your bond expire as you will no longer need it.

If the Motor Vehicle Dealer's Board requires you to continue having a bond, we can continue to help you renew your bond at the lowest possible prices.

Getting Your Vehicle Dealer License In Neighboring States

It's common for many of our Virginia clients to have their auto dealer license in one or more neighboring states. Here the neighboring states we help with the most:

• North Carolina auto dealer bond
• West Virginia auto dealer bond
• Maryland auto dealer bond
• Pennsylvania auto dealer bond

Motor Vehicle Dealer Bonds And Getting Your Virginia Business License/Registration

Getting your Virginia vehicle dealer retail license is a very straightforward process with a few steps that are unique to Idaho.

At a high level the steps are:

1. Complete the official application
2. If you're a franchise dealer, provide your franchise agreement
3. If you're an independent dealer, take the required training course and pass the examination
4. Purchase your auto dealer bond
5. Make your payment to the Recovery Fund
6. Obtain the appropriate proof of zoning for your business
7. Obtain the required salesperson licenses if you need more than yourself
8. Prepare your dealership location and pass the dealership location requirements
9. Pass your dealership inspection
10. Pay all the applicable fees for your dealership and business setup