New York Motor Vehicle Dealer and Broker Bonds

Get Your New York Motor Vehicle Dealer Bond

Who Is Required To Purchase an Auto Dealer Bond In New York?

Unlike many states New York has very simple to understand bond requirements.

Here's how it breaks down:

Here are some important notes on these bond amounts:

• Franchised dealer's bond is $50,000 regardless of how many vehicles are sold during the year
• Franchised dealers that sell trailers, motorcycles, vehicles weighing over 10,000 pounds, ATVs, boats and snowmobiles DO NOT have to purchase a surety bond

These bond amounts are the maximum dollar amount of protection available to a customer or the New York Department of Revenue if they are financially impacted by the dealer's purposeful negligence.

Automobile Broker Bond Requirement

While not directly a vehicle dealer, auto brokers are required to purchase a $100,000 surety bond. This bond is required by the New York Department of State.

Why is a New York Motor Vehicle Dealer Bond Required?

The Department of Motor Vehicles sets the licensing requirements. This is the first step the state takes to ensure only qualified businesses get licensed and are able to serve the New York public.

This licensing process includes:

• Purchasing a surety bond as described above
• Purchasing the minimum levels of liability insurance
• Meeting the building building and zoning requirements
• Ensuring all business formation documents and certificates are filed
• Paying all the applicable application fees

Despite these licensing requirements, every year there will be a few dealerships that commit some form of dealer fraud to make more money to steal money.

Examples of these fraudulent 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 customer falls victim to these or similar actions by a licensed dealer, the customer can make a claim against the auto dealer surety bond for financial compensation.

If the Department of Revenue discovers sales taxes were purposefully withheld, they can make a claim against the surety bond to recoup some or all of the tax liability.

A successful claim typically results in a temporary license suspension until the claim is handled. The maximum claim or total of all claims against a dealer is capped at the bond amount.

Automobile Brokers

A broker is responsible for finding and negotiating a vehicle purchase for a client.

Similar to an auto dealer, a broker is capable of charging false fees or negotiating a high price for a vehicle to take the difference. Actions similar to these are what the surety bond protects against.

How Much Does a New York Auto Dealer Bond Cost?

The price a surety bond is determined by:

• The bond amount
• A rate quoted from a surety

A surety is an insurance company that underwrites vehicle dealer surety bonds. And for most bonding requirements, the surety uses the following factors to determine their rate:

• Personal credit or owner and owners
• Dealer industry and experience
• The bond history if any owner has been licensed in the past

Based on these factors, the surety will quote their rate and that rate multiplied by the bond amount is the price you pay.

The rate quoted multiplied by your bond amount is the price you pay.

It's a simple process and it's how you can save hundreds of dollars when you purchase your bond.

How To Save Hundreds of Dollars Buying Your Dealer Bond

We are Surety Bonds Direct, a specialized surety agency. When you need to purchase a surety bond, we make the process easy.

We work with the highest A-rated sureties, allowing us to price compare and shop for you.

It doesn't make a lot of sense, but different sureties come back with vastly different rates for whatever internal reasons. We've seen rates vary two to three percentage points.

And this is how we can save you a lot of money. Let's look at examples.

$20,000 Used Auto Dealer Surety Bond

If you're a used auto dealer selling less than 50 vehicles per year, we have already secured a low fixed price for your bond starting at $160 for the year.

The reason is there is less risk with dealers selling this volume of vehicles.

• If you know you have good credit we might be able to secure you lower pricing
• If you purchase for two or three years, you can get a multi-year discount

Remaining Auto Dealer Bonds

As we've mentioned, the remaining auto dealer bonds are all credit driven following the above steps.

The process to obtain the lowest pricing only takes about 1 business day.

Auto Dealer Bond Pricing Example

Here's some example pricing based on the $100,000 used dealer bond amount. The rates in the table are from really good to a little higher than average.

Pay attention to the price differences. You can see how significant these differences can be.

The money saved can pay for the application fees or pay for any dealer plates you might end up purchasing.

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 New York Auto Dealer Bond Last?

When you're ready to purchase your bond, all you have to do is complete an online order form to officially purchase.

Your bond has a term or 12 months from the active date. You'll choose your active date as you complete the order form.

Once your payment is processed our bond issuance team will prepare your bond with the:

• Correct bond form
• Required signatures and seals
• Power of attorney

Once your bond is complete you will receive an email with your bond attached.

All you have to do is submit it with your application.

Renewing Your New York Dealer Bond

Remember, your renewal date will be 12 months from the active date you choose when you purchased your bond.

This is another great reason to work with Surety Bonds Direct. You're assigned your own bond specialist who will help manage this bond and any additional bonds you need throughout your career.

As your expiration date approaches, 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 New York Business License/Registration

New York has a very streamlined licensing process compared to many states.

We have a helpful blog post that outlines the New York auto dealer license process. The New York Department of Motor Vehicles website does a great job of outlining the steps and all the forms you'll need.

At a high level, the licensing steps are:

• Decide on your license classifications or classification
• Purchase your liability insurance
• Purchase your surety bond
• Go through the on-site investigation of the dealership property
• Meet the official dealer sign requirements
• Download your starter kit with all the appropriate forms to run your dealership
• Submit your application and pay all the required fees

When you're ready to get the surety bond process completed 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.

Additional New York Motor Vehicle Dealer Bond Resources & Links

The New York State Division of Licensing Services defines “Automobile broker businesses” as those who, for a fee, commission or other valuable consideration offers to provide, or represents that he will provide to a consumer a service of purchasing, arranging, assisting or effecting the purchase of an automobile as agent, broker, or intermediary for a consumer. “Automobile broker business” does not include an individual registered as a dealer pursuant to article sixteen of the New York vehicle and traffic law, or any person who sells, offers for sale or acts as agent, broker or intermediary in effecting the purchase of three or fewer automobiles in any calendar year.

New York automobile broker businesses must furnish and maintain in effect a surety bond in an amount of $100,000 executed by a properly authorized surety company. The surety bonds is conditioned upon the automobile broker business' proper payment of all valid bank drafts, including checks, drawn for the purchase of motor vehicles and safekeeping of all customer deposits related to the sale of motor vehicles between the time of receipt of such customer deposit and the transfer of good and valid title to the vehicle to the customer.