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.
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:
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.
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.
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.
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 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.
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.
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.
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.
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.
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.