What is a Connecticut Motor Vehicle Dealer, Repairer or Leasing Company Bond?
Connecticut requires new and used vehicle dealers, vehicle repair shops, and vehicle leasing companies to purchase a surety bond, often called an auto dealer bond.
An auto dealer bond is a type of insurance contract the Connecticut DMV requires all dealers to purchase as a financial guarantee to follow all state laws and provide customers with honest, fair, and ethical services.
When you purchase your auto dealer surety bond, you're making this guarantee to the Connecticut DMV and to your customers.
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Licenses with the following classifications are required to purchase a dealer surety bond.
| Dealer Classification | Requires an Auto Dealer Surety Bond |
|---|---|
| New Vehicle Dealers | Yes |
| Use Vehicle Dealers | Yes |
| Vehicle Leasing Companies | Yes |
| General Repairer Shops | Yes |
| Limited Repairer Shops | Yes |
| Recycler (Junk Yard) | No |
Why is a Connecticut Motor Vehicle Dealer Bond Required?
One of the responsibilities of the Connecticut DMV is to protect the public from auto dealerships or vehicle repair shops that may deliberately case financial harm to their customers.
This is why dealerships are required to obtain a license to legally sell vehicles in Connecticut. And a big part of successfully obtaining a license is satisfying the surety bond requirement.
It's unfortunate, but there are dealerships that will purposefully harm their customers and the surety bond provides financial protection.
Examples of fraudulent behavior in violation of laws and ethical business practices are:
- Transferring a title incorrectly
- Selling vehicles with no title or fake titles
- Misrepresenting vehicle information like milage, manufacture year, or accident history
- Stealing from customer deposits
- Failing to pay sales tax on vehicles to the Connecticut Department of Revenue
The surety bond provides a source of funds for financial reimbursement for the customer (or the Connecticut Department of Revenue) if a valid claim is made against the dealer for any of these types of actions.
How Much Does a Connecticut Auto Dealer Bond Cost?
The cost of an auto dealer bond in Connecticut depends primarily on two factors:
- The type of dealer license you're applying for
- Where you purchase your surety bond
1. The Type of Dealer License
| Dealer License | Requires an Auto Dealer Surety Bond | Bond Amount |
|---|---|---|
| New Vehicle Dealers | Yes | $60,000 |
| Use Vehicle Dealers | Yes | $60,000 |
| Vehicle Leasing Companies | Yes | $15,000 |
| General Repairer Shops | Yes | $25,000 |
| Limited Repairer Shops | Yes | $10,000 |
| Recycler (Junk Yard) | No | -- |
As you can see each license has its own requirement for the surety bond amount.
Remember, the amount is not the cost, rather it's the maximum financial protection available to a dealer's customers (or the Connecticut Department of Revenue) if the dealer is guilty of any fraudulent act.
How Is An Auto Dealer Bond Cost Calculated?
The surety is an insurance company that writes surety bonds. Each surety typically uses their own underwriting assessment to determine a rate based primarily on the:
- Personal credit of the applicant
- Business and industry experience
- Claims on past bonds if there are any
Using these factors the surety will quote a rate and this rate multiplied by the bond amount is the price you will pay.
Here's a table of example prices you might expect based on good rates to average:
| Bond Amount | Rate | Price |
|---|---|---|
| $60,000 | 0.5% | $300 |
| $60,000 | 1% | $600 |
| $60,000 | 2% | $1,200 |
| $60,000 | 3% | $1,800 |
| $60,000 | 4% | $2,400 |
| $60,000 | 5% | $3,000 |
Where You Purchase Your Auto Dealer Surety Bond
Because each surety uses their own assessment of you, the rates they quote will vary.
We've seen rates so different it's saved our customers hundreds of dollars.
And this is why using a specialized surety agency like Surety Bonds Direct is a smart decision.
We work with multiple A rated sureties so we can price shop for our customers and deliver the lowest price every time.
For Connecticut general repairer surety bonds and limited repairer surety bonds, we've already secured low fixed prices, with no credit check required.
| Dealer Classification | Bond Amount | Click Link To Get FREE Quote |
|---|---|---|
| Limited Repairer Shops | $10,000 | Click for Purchase - $100 |
| General Repairer Shops | $25,000 | Click for Purchase - $100 |
For the following licenses we will have to price shop for you and get the lowest rate.
| Dealer Classification | Bond Amount | Click Link To Get FREE Quote |
|---|---|---|
| New Vehicle Dealers | $60,000 | Click for Quote |
| Use Vehicle Dealers | $60,000 | Click for Quote |
| Vehicle Leasing Companies | $15,000 | Click for Quote |
It costs you nothing to have our bond specialists price shop for you. And there's no obligation to purchase once we deliver your pricing.
So you have no risk and nothing to lose by requesting pricing today.
In fact, getting pricing now makes it easier and faster when it comes time to purchase your bond and get your dealer application submitted. We can generally quote prices 2 months in advance of the first day you need your bond to be active.
Motor Vehicle Dealer Bonds And Getting Your Connecticut Business License/Registration
Connecticut has a pretty straight forward process for getting the application filled out. However, there are a lot of requirements to keep straight.
We created a post outlining the steps to get your Connecticut auto dealer license application filled out. Plus we've made sure to answer all of the confusing questions most Connecticut dealers have when meeting all the requirements for completing the application process.
At a high level the steps are:
- Organize all the individuals who are required to be listed on the application
- Fulfill all of the business entity requirements
- Meet the dealership and business location requirements
- Satisfy the auto dealer bond requirement
- Determine how you want to deal with dealer license plates
- Provide proof of business conduct and knowledge
- Determine which of the many optional forms meet your business goals
- Submit your application for initial review
Can't find what you're looking for? Let us help!
Get Started » or, if you'd prefer, call us at
(No obligation, takes 2 minutes)