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New York Auto Dealer Bond

April 14, 2022

Like many states, New York requires Auto Dealers to be licensed and to obtain a New York Auto Dealer Bond. Learn more about what these auto dealer bonds guarantee, what the cost and how to get one.

 

What Does a New York Auto Dealer Bond Guarantee?

 

A New York Auto Dealer Bond is a type of License Bond. The Auto Dealer Bond guarantees that the Dealer will comply with the requirements of Vehicle and Traffic Law section 415(6-b). These requirements include the agreement by the Auto Dealer to:

 

  • pay all valid bank drafts, including checks, drawn by the Principal for the purchase of motor vehicles;
  • transfer good title to each motor vehicle which the Principal sells;
  • maintain and keep safe all customer deposits related to the sale of a motor vehicle from the time of receipt of such customer deposit until good title has been transferred to the customer; 
  • pay all fines imposed upon the Principal by the Commissioner of Motor Vehicles pursuant to the provisions of the Vehicle and Traffic Law; and
  • repay any overcharges of a customer for vehicle registration and titling charges payable to the Commissioner of Motor Vehicles for registering and titling the sold vehicle.

 

Who Are the Parties to a New York Motor Vehicle Dealer Bond?

 

Chart showing the parties to a New York Auto Dealer Bond including the Principal, Surety and Obligee. . This has orange and blue boxes with a New York license plate in the middle. A car lot in the background.

 

The Obligee is The State of New York. This is the party requiring and benefitting from the bond. The Principal is the Auto Dealer. This is the party making the promise The Surety is the third party bond company that is guaranteeing the Auto Dealer's compliance.

 

What Does a New York Auto Dealer Bond Cost? 

 

Most Auto Dealers can expect to pay 1% of the bonded amount per year. The premium is required to be paid each year the Motor Vehicle Dealer Bond is in place. Auto Dealers with credit challenges may be required to pay more. Preferred Rates are available for Auto Dealers who can provide strong financial statements.

 

Required Amounts of New York Motor Vehicle Dealer Bonds 

 

New York Auto Dealer Bond Requirements- This chart shows the amount of bond that each type of Dealer is required to post. A dealership is in the background.

 

The required surety bond amounts depend on the type and number of vehicles being sold. 

 

Used Vehicle Dealers that sold 50 or fewer vehicles in the previous calendar year need a bond in the amount of $20,000.

 

Used Vehicle Dealers that sold more than 50 vehicles in the previous calendar year need a bond in the amount of $100,000.

 

New Vehicle Dealers need a bond in the amount of $50,000.

 

Cancellation of a New York Auto Dealer Bond

 

The state of New York requires that the Surety give 60 days written notice to the

New York State Commissioner of Motor Vehicles prior to canceling an Auto Vehicle Dealer Bond. The Surety must also provide notice to the Commissioner when the bond is canceled or lapses. The notices must be sent via First Class Mail.

 

Obtaining a New York Auto Dealer Bond 

 

Obtaining a New York Auto Vehicle Dealer Bond is simple. Most Auto Dealers can obtain them here with a simple credit check. The bonds can then be issued and printed in minutes.

 

Green button for the instant purchase of new york auto dealer bonds for used vehicles, 51 vehicles or more.

 

Green button for the instant purchase of new york auto dealer bonds for used vehicles, 50 vehicles or less..

 

Green button for the instant purchase of new york auto dealer bonds for new vehicle dealers.

 

Bad Credit New York Auto Dealer Bonds

 

Auto Dealers with credit challenges can still obtain these bonds. Additional Information may be required but these bonds can still be obtained quickly in most cases.

 

Claims Against a New York Auto Dealer Bond

 

Should an Auto Dealer not comply with the laws and regulations set forth on the code, a claim may be made against the bond.

 

Recovery against this Bond may be made by a person, including the State, who obtains a judgment against the Principal for an act or omission on which the Bond is conditioned, if the act or omission occurred during the term of the Bond.

 

Examples of potential bond claims include:

 

  • Amounts drawn by the Auto Dealer for the purchase of motor vehicles.

 

  • Overcharges by the Auto Dealer for registration or title fees.

 

  • The amount paid to the Auto Dealer for a deposit, for a motor vehicle in which a good title was not delivered. 

 

Indemnity Required on New York Auto Dealer Bonds

 

If a claim is made against the Dealer Bond, the Surety will investigate the claim. If the claim is valid, the Surety must pay the claim. The Surety will then seek reimbursement from the Principal Auto Dealer and any other indemnitors. In this way, surety bonds differ from insurance.  Auto Dealers should understand this before purchasing a bond. More can be read about Indemnity here.

 

Penal Sum Limits Bond Liability 

 

Claims against a New York Auto Dealer Bond are limited to the bond's Penal Sum and do not stack liability. This means once the bond limit is reached, the Surety is not liable for any additional amounts regardless of the number of claims or the amount of claims.

 

Other Surety Bonds May be Required

 

Auto Dealers operating in New York may be required to provide additional bonds to the state. A common example is Notary Bonds. Many of the bonds can also be purchased instantly by visiting our New York Surety Bond Page.

New York Auto Dealer Bonds are required by law in order to maintain a dealer license. They are easy to get and affordable for most Auto Dealers. Contact Axcess Surety anytime to obtain these and other bonds. You can also visit our Surety Bond FAQ Page for many common questions about surety.

 

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