Learn how to become licensed as a Florida auto dealer, and speak with an Single Source Insurance agent today about purchasing the bond you�ll need to operate as an auto dealer in Florida.�
What Are the Different Types of Florida Auto Dealer Licenses?
The Florida Department of Highway Safety and Motor Vehicles (DHSMV) issues ten different types of motor vehicle dealer licenses, differentiated by what types of vehicles are being sold (new or used cars, trucks, motorcycles, RVs. etc.) and to whom (retail customers, other dealers, auction buyers, etc.). The most common license, the Vehicle Independent (VI) dealer license, allows a dealer to buy, sell or deal in used motor vehicles. Because it is the most common, our focus here is on the VI license.
What Are the Steps in the Licensing Process?
There are a few preliminary steps you�ll need to take in preparation for applying for a Florida auto dealer license.
Establish a business entity and register it with the Florida Division of Corporations.
Obtain a Federal Employer Identification Number (FEIN), unless you will be operating as a sole proprietor, in which case you can use your Social Security Number.
Register with the Florida Department of Revenue and obtain a sales tax number.
Enroll in a DHSMV-approved pre-licensing dealer training class and earn a Certificate of Completion.
Secure a permanent business location and have it inspected and approved by a compliance examiner from your local DHSMV office.
Purchase garage liability insurance.
Purchase a $25,000 Florida auto dealer bond. (You have the option of providing a $25,000 irrevocable letter of credit, but most dealers don�t want to tie up that much cash or credit that could be used as operating capital).
Install a sign that has been pre-approved by the DHSMV compliance coordinator.
Get fingerprinted electronically by an approved provider.
Once you have accomplished all of the above, fill out the license application (form 86056) and submit it to the regional DHSMV office with the required supporting documents and application fee (currently $300).
Why is a Florida Auto Dealer Bond Required?
A Florida auto dealer bond is your pledge to operate in compliance with all laws and regulations governing motor vehicle trading in the state. The bond is a legally binding contract between you as the licensed dealer (referred to as the bond’s “principal”) and two other parties: DHSMV (known as the “obligee”) and the bond’s guarantor (the “surety”).
If you engage in any unlawful or unethical business conduct that causes a financial loss to the obligee (such as failing to pay required fees or taxes) or to a consumer (deliberately misleading a customer about the condition of a vehicle, for example), the injured party can file a claim against the bond and be compensated.
How Are Florida Car Dealer Bond Claims Paid?
While the principal is legally obligated to pay any claim the surety determines is legitimate, as the bond�s guarantor, the surety typically will pay a valid claim initially and then be reimbursed by the principal. If that debt is not repaid by the principal, the surety can take legal action to recover the claim amount.�
How Much Does a Florida Car Dealer Bond Cost?
To obtain the required bond, you�ll pay an annual premium that is calculated by multiplying the $25,000 bond amount by the premium rate established for you by the surety. The main concern is the risk involved in paying claims on your behalf, which is measured by your personal credit score. With a high credit score, you would be considered a low risk, which would result in a premium rate as low as one percent, for an annual premium of $250. If your credit score is low, your premium rate could be much higher.
Get a Florida Auto Dealer License and Surety Bond
Request a convenient online quote today, or contact us to speak with one of our surety bond experts who can answer your questions about Florida auto dealer bonds.
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Frequently Asked Questions
What is a surety bond for auto dealers?
A surety bond for auto dealers is a type of financial guarantee that protects consumers by ensuring the dealer fulfills their legal and contractual obligations.
What is the cost of getting an auto dealer bond?
The cost of getting an auto dealer bond varies depending on factors such as the bond amount required, your credit history, and the insurance provider. Typically, the annual premium ranges from $100 to $2,500.
What are the requirements for getting an auto dealer bond?
The requirements for getting an auto dealer bond typically include obtaining a license, maintaining a physical business location, and meeting financial responsibility standards set by the state or local authorities.
Can Florida car dealers operate without a bond?
Florida car dealers are required to have a surety bond in order to operate legally. They cannot operate without a bond, as it is a mandatory requirement for car dealerships in the state.
How long does it take to get an auto dealer bond?
The process of obtaining an auto dealer bond typically takes between 2 to 4 weeks, depending on the state's requirements and the applicant's financial and credit standing.
How long does it take to get an auto dealer bond approved?
Getting an auto dealer bond approved typically takes between 1-3 weeks, depending on the state's requirements and the speed of the application process.
What is the purpose of bonding for Florida car dealers?
The purpose of bonding for Florida car dealers is to provide financial protection for consumers against potential fraud, misrepresentation, or other violations of state laws governing the sale of motor vehicles.
How do I obtain an auto dealer bond in my state?
Obtaining an auto dealer bond in your state typically involves completing an application, providing financial information, and paying the required premium. The specific requirements may vary by state.
Do Florida car dealers need a new bond for each location?
Florida car dealers are required to have a surety bond for each of their business locations in the state to operate legally.
How much does an auto dealer bond cost?
The cost of an auto dealer bond varies depending on factors such as the bond amount required, the applicant's credit history, and the state's specific requirements. Typically, the annual premium ranges from $100 to $2,500.
Do I need an auto dealer bond to sell used cars?
Whether an auto dealer bond is required to sell used cars depends on the regulations in your state. Many states mandate that auto dealers obtain a surety bond before they can legally sell used vehicles.
What happens if a Florida car dealers bond expires?
If a Florida car dealer's bond expires, the dealer may no longer be able to legally operate their business until a new bond is obtained, as the bond is a requirement for licensure.
Do all states require an auto dealer bond to operate?
The requirement for auto dealer bonds varies across states, as not all states mandate their use to operate a dealership.
Can I get an auto dealer bond with bad credit?
Getting an auto dealer bond with bad credit is possible, but it may be more challenging and require a higher bond amount or additional collateral. The approval process often considers factors like credit history, financial stability, and business experience.
Who issues auto dealer bonds to car dealerships?
Auto dealer bonds are issued to car dealerships by surety companies licensed by the state to provide financial assurance and protect consumers.
How do I get a surety bond for my auto dealership?
To obtain a surety bond for your auto dealership, you need to contact a surety bond provider, provide the required information, and meet the underwriting criteria to secure the necessary bond.
How do Florida car dealers obtain a bond?
Florida car dealers obtain a bond by securing a surety bond with a licensed surety company, which is required by the state to operate as a car dealer.
What is the purpose of an auto dealer bond?
The purpose of an auto dealer bond is to provide financial protection for consumers against any fraudulent or unethical actions by the auto dealer.
Are all Florida car dealers required to be bonded?
All Florida car dealers are required to be bonded to protect consumers against fraudulent practices or financial losses.
What is the process of getting an auto dealer bond?
The process of getting an auto dealer bond involves applying for a surety bond, providing financial information, and meeting state-specific requirements to obtain a license to operate as an auto dealer.
How do I apply for an auto dealer bond?
Applying for an auto dealer bond involves submitting a completed application, providing required financial documents, and paying the necessary fees to obtain the required surety bond.
What is an auto dealer bond and why is it required?
An auto dealer bond is a type of surety bond required by state laws for car dealerships. It serves to protect consumers from potential financial harm or fraudulent practices by the dealer.
Who requires auto dealers to have a surety bond?
Auto dealers are required to have a surety bond by state laws and regulations that govern the automotive industry in order to protect consumers against fraudulent or unethical business practices.
What is the average cost of an auto dealer bond?
The average cost of an auto dealer bond typically ranges from $100 to $2,500 annually, depending on factors such as the bond amount required, the applicant's credit history, and the insurance provider.
How much does a Florida car dealer bond cost?
The cost of a Florida car dealer bond typically ranges from $100 to $2,500 per year, depending on factors such as the bond amount required, the applicant's credit history, and the insurance company providing the bond.
What documents are needed for an auto dealer bond?
The documents needed for an auto dealer bond typically include a completed bond application, financial statements, and any additional information required by the surety company.
Are there alternatives to a surety bond?
Alternatives to a surety bond include cash deposits, letters of credit, and performance bonds. These alternatives can provide the same level of assurance to obligees without the need for a traditional surety bond.
How is an auto dealer bond verified?
An auto dealer bond is verified by confirming the bond's validity, amount, and active status with the issuing surety company or the state regulatory agency overseeing auto dealer licensing.
What are typical bond limits for auto dealers?
Typical bond limits for auto dealers vary by state, but often range from $25,000 to $100,000 to cover potential liabilities and consumer protection.
Can I transfer my auto dealer bond?
Transferring an auto dealer bond is possible, but it typically requires approval from the bond issuer and compliance with any applicable state or local regulations.
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