North Carolina requires auto dealers to be licensed and to provide North Carolina Auto Dealer Bonds. These bonds are an important tool to protect the public. Learn more about these license bonds and instantly purchase one online in minutes.
A North Carolina Auto Dealer License Bond Guarantees that an auto dealer will uphold Article 12 and 15 of Chapter 20 of the North Carolina General Statutes.
Article 12 guarantees that the North Carolina Auto Dealer will comply with all laws and regulations for selling vehicles in the state including free and clear title to vehicles sold. Article 15 guarantees that the dealer will not change the odometer of any vehicle and will lawfully disclose the correct mileage to a buyer.
The Auto Dealer is the Principal on a North Carolina Auto Dealer Bond. The dealer purchases the dealer bond by paying a premium and providing indemnity to a surety bond company. In return, the surety provides a financial guarantee to the State of North Carolina, called the Obligee. If the dealer does not uphold the laws of the state, a claim can be made against the bond. The surety bond company will investigate the claim and be forced to pay if it is found to be valid. The surety bond company will then seek to be reimbursed from the auto dealer for any loss that is paid.
The licensed dealer is responsible for notifying the Commission of any claim within ten days of being served with the notice.
A North Carolina Auto Dealer Bond must be in the amount of $50,000 for the first dealership salesroom and an additional $25,000 for each additional salesroom. For example, a dealership with 3 locations will need $100,000 worth of bonds. This would be $50,000 for the first location, $25,000 for the second location, and $25,000 for the third location.
North Carolina Auto Dealer Bonds cost about 1% per year for most auto dealers. That means a $50,000 bond will cost $500 each year that the bond is in place. Some surety bond companies are willing to provide discounts for dealers who are willing to purchase multiple years upfront.
North Carolina Auto Dealers Bonds can be purchased online instantly. They require only a credit check of the owners. The auto dealer should be ready to provide the following:
Most dealers can obtain a bond, even with bad credit. The dealer may have to provide additional information such as personal or business financial statements. Additionally, the dealer should be ready to provide information regarding the reason for the credit challenges.
A North Carolina Auto Dealer Bond must remain in place as long as the dealer is licensed in the state and open for business. The surety bond company may cancel the bond prior to the next renewal by giving thirty days written notice to the Commissioner of Motor Vehicles (Commissioner) and the dealer. If this happens, the dealer will need to find a replacement bond company before the thirty days have expired.
The surety bond company may cancel the bond during the term of the bond if the dealer’s license is suspended or revoked. However, the surety must still provide thirty days written notice. The surety will also still be responsible for claims that occurred while the bond was in place and during any cancellation period.
According to North Carolina law 20-287,
“It shall be unlawful for any new motor vehicle dealer, used motor vehicle dealer, motor vehicle sales representative, manufacturer, factory branch, factory representative, distributor, distributor branch, distributor representative, or wholesaler to engage in business in this State without first obtaining a license.”
As such, both new vehicle dealers and used vehicle dealers need to be licensed and obtain North Carolina Auto Dealer Bonds.
Further a Motor Vehicle Dealer is defined by Chapter 20 as,
“A person who does any of the following:
Further, the following is required of retail and wholesale auto dealers:
Retail - Have an “established salesroom” containing at least 96 square feet of floor space in a permanent, enclosed building, or separate and apart from any living quarters, residence, or other business and having a separate entrance.
Wholesale - Have an “established office” containing at least 96 square feet of floor space in a permanent, enclosed building or structure which is accessible to Division personnel and is a place where books, records and files are required to be kept.
North Carolina auto dealers may also need other bonds such as notary bonds. Many of these bonds can also be purchased online at the North Carolina Surety Bond page.
North Carolina Auto Dealer Bonds are required for licensed dealerships in the state. Fortunately, these bonds are easy to obtain and can be purchased online. Auto Dealers can also learn more about surety bonds including frequently asked questions by visiting our Surety Bond page. Dealers can also contact the surety bond experts at Axcess Surety with questions or further assistance.
Axcess Surety are bond experts. While many bond brokers exist on the internet, many have very little experience in bonds. Our people have been doing surety for many years. We have the markets and expertise to provide the best terms for those in all situations.
A copy of a North Carolina Auto Dealer Bond form can be found by clicking on the image.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
