A Car Dealer Bond is a legal contract that guarantees and protects customers.
The Car Dealer Bond promises to provide aid in the recovery of financial loss resulting from dealer fraud or unethical business activity.
California DMV requires motor vehicle dealers to procure a Car Dealer Bond in order to operate legally.
The Car Dealer Bond also acts as a line of credit and assists in regulating the Car Dealer industry.
A Car Dealer Bond conveys credibility to both current and future customers. The typical components of a Car Dealer Bond are:
Obligee – The government entity or individual requiring a “principal” to be bonded. In this case the California DMV.
Principal – The primary person who is required to be bonded. Car Dealer Bond Companies are the financial guarantor who assures the “obligee” that the “principal” can perform the task. The Obligee is responsible for reimbursement of any paid bond claim. Parthership, Corporate & LLC’ dealerships may require individual credit reports of all officers / managers to fulfill Obligee requirements.