Bad news. New York auto dealer bond rates have increased. This may or may not affect your bond premium amount. The good news. NFP is on top of all rate changes and we’ll work with you to help get you properly bonded with the least possible out of your pocket.
New and used car dealers in New York will soon be required to achieve different bonding & licensing standards and requirements. On March 23, 2017, new NYC car dealer bond bylaws for license and bonding requirements were announced. This essentially raises bond amounts from 75k to 100k, among other changes.
This increase in bond amount does not necessarily mean it will increase your bond premium, as premium is determined by several factors, including credit. An applicant with good credit normally would need to pay between 1% and 3%.We offer poor credit solutions as well.
How New York Car Dealer Bonds Work
Auto dealer surety bonds work by guaranteeing someone else that you or your company will uphold a type of obligation. This can be an obligation to obey local regulations and complete a project according to specifications, such as with a contract surety bond, or the obligation to maintain a property, as with a deposit bond.
The surety, the company from which you purchase your bond, pays when a claim is made on the bond. A claim can be made on the bond by the obligee – the bond-requiring person or agency – if you do not uphold your obligations. The surety pays proven claims, and you repay the surety.
Before obtaining a car dealer bond, though, you must apply for one. The application process can include both a personal and business credit check. It also includes paying a non-refundable percentage of the bond required, the principal payment.
If you uphold your legal obligations under the bond, the principal payment will be your only out-of-pocket expense in obtaining a surety bond. If a customer threatens to claim your bond, it is always in your best interest to work things out with them before this happens. Bonding is often needed for licensing renewals and project bidding, and a claim on a bond may leave you paying higher future principals or not qualifying for a bond at all. Get bonded, and be ready for the New York Auto Show. We’ll see you there.
At NFP, we're here for all your New York surety bond needs. Contact us today.