Kentucky Motor Vehicle Dealer Bonds

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Who Is Required To Purchase an Auto Dealer Bond In Kentucky?

Every license classification may be required to purchase an auto dealer bond. Here are the classifications in Kentucky:

• New vehicle dealer
• User vehicle dealer
• Motor vehicle leasing dealer
• Supplemental lot dealer
• Wholesale vehicle dealer
• Motor vehicle auction dealer
• Automotive mobility vehicle dealer
• Restricted dealer/mobility dealer
• Restricted recycling dealer
• Motorcycle dealer
• Recreational camper dealer

 

When is a Kentucky Auto Dealer Bond Required And What Is The Amount?

Your bond amount will be based on your financial statement.

Kentucky is unique because not all dealers are required to purchase this auto dealer surety bond.

First, you have to submit your financial statements, showing a net-worth figure with these requirements:

• $100,000 in liquid assets (typically cash in the bank)
• And/or $50,000 in cash and fully paid for inventory in the owner's name or business name

If there is a short fall, the bond amount will be difference between the $100,000 requirement and the figure you calculated above.

There is a minimum bond amount of $25,000.

This means if the shortfall between the $100,000 requirement and your cash and/or inventory is only $10,000, you will need to purchase a $25,000 surety bond.

 

Why is a Kentucky Motor Vehicle Dealer Bond Required?

The Department of Revenue sets a licensing process as a way to ensure only qualified individuals and businesses can sell vehicles in the state.

These requirements include items such as:

• Having your financials inspected
• Making sure your dealership lot is set up correctly
• Paying an assortment of state mandated fees
• Ensuring your sales people are properly licensed

This licensing process is the primary method to ensure only serious individuals and businesses apply to sell vehicles.

Yet despite the licensing process, every year there will be a few dealerships that purposefully choose to harm their customers financially to make more money.

Examples of these actions include:

• Improperly transferring a title
• Selling vehicles with no title
• Misrepresenting vehicle information like mileage, manufacture year, or condition
• Stealing customer deposits
• Failing to pay the correct sales taxes to the Department of Revenue

If a licensed dealer commits any of these acts, and depending on the fraudulent act, the customer and/or state can make a claim against the dealer's surety bond for financial compensation.

However the claim amount is restricted by the total bond amount, at which case other legal methods are required for any wrong doing.

 

How Much Does Kentucky Auto Dealer Bond Cost?

So you know the bond amount is variable based on your financial status.

In Kentucky, regardless of the bond amount, auto dealer bonds are a credit driven bond. This means one of the factors that impact the price you pay is the credit reports of the owner and/or owners.

This also means that your price is going to be unique to your businesses.

This custom price is determined by a rate from a surety, the insurance company that is in the market for underwriting vehicle dealer surety bonds. There are a lot of different sureties who provide this service and all of them consider the following factors:

• Personal credit or owner and owners
• Dealer industry and experience
• Prior bond claims if an owner has been licensed in the past

While the factors are the same, each surety is different in how they weigh and assess you and your business and ownership.

This means rates can vary by one, two, or more percentage points and this is how you can save hundreds (potentially thousands) of dollars when you purchase your bond.

 

How to Easily Save Hundreds of Dollars When Purchasing Your Bond

At Surety Bonds Direct, we are a surety agency. We work with the highest A-rated sureties that specialize in vehicle dealer bonds.

• We will price shop for you when you request a price quote
• We'll collect all the different rates from these sureties
• And deliver to you the lowest possible rate and price

It's our job to make purchasing your surety bond easy.

 

Kentucky Auto Dealer Bond Price Examples

Here's example pricing with typical rates ranging from really good to about average.

We'll use a $50,000 bond amount for the example. You can easily substitute your bond amount in.

Pay attention to the price differences. They can be significant.

You can see even if you only require the minimum bond amount, you can save hundreds of dollars. You can save enough to easily cover all or most of the application fees and dealer plate fees.

Getting your exact pricing within 24 hours costs you nothing. Plus you're under no obligation to purchase the bond.

Click here and complete our quote form. It's fast to fill out and if you prefer to speak with a person, call a bond specialist at 1-800-608-9950.

 

How Long Does The Kentucky Auto Dealer Bond Last?

During the purchase process for your bond, you'll choose an effective date. This is the date you want your bond to become active.

For most of our customers, the effective date is the purchase date of their bond.

Your bond payment will be one payment for the term of the bond, starting on the effective date.

In Kentucky the bond term is 12 months from this effective date.

As your renewal date (or bond expiration date) approaches, all you have to do is pay the renewal premium for the next year.

Your bond specialist will contact you 30 to 45 days in advance with pricing ready to go so the renewal process is seamless.

Once you pay the renewal premium, you don't have to do anything else. Your bond is active and you can continue selling vehicles.

 

Motor Vehicle Dealer Bonds And Getting Your Kentucky Business License/Registration

Kentucky has a helpful resources page on their website with links to all the forms and instruction handbooks you'll need. Click here to view this resources page.

At a high level, the licensing steps are:

• Decide on your license classifications or classification
• Determine your ownership details and identities
• Determine if you'll need to purchase a surety bond
• Purchase your surety bond
• Fulfill all of the dealership and property requirements
• Complete your application

Dealer license fees, salespersons fees, and insurance is not required prior to approval for your application.

Once your application is approved you'll have to fulfill these requirements. This is where you'll be notified of your bond amount if you're required so you can double check against your calculations.