A New York MVD bond is a type of surety bond required by the New York State Department of Motor Vehicles (DMV). The bond guarantees that the principal (the person or company obtaining the bond) will comply with all laws and regulations that apply to the activities of the DMV. The bond also guarantees that any fees or fines assessed against the principal will be paid. The bond is purchased by the principal and is held by the DMV as evidence of the principal’s good faith. The principal must renew the bond on an annual basis in order to remain in compliance. The bond protects the general public from any harm or loss caused by the principal’s activities and provides financial recourse if the principal fails to comply with the laws and regulations of the DMV.
What is an New York Car Dealer Bond?
New York Car Dealer Bonds are required by New York's DMV to obtain your Dealer license. The MVD Bond amount for the sale of New and used vehicles is set at $20,000. The Auto Dealer bond ensures that the principal shall comply with the conditions of any contract made by such licensee in connection with the sale or exchange of any motor vehicle and shall not violate any of the provisions of law relating to the conduct of the business for which it is licensed.
The State requires a Car Dealer bond for each license you hold:
$20,000 surety bond for New and Used Motor Vehicle Dealers, Public Consignment Auction Dealers for fewer than 50 cars sold
$50,000 surety bond for required amount for all dealers registered as one
$100,000 surety bond for New and Used Motor Vehicle Dealers after 50 cars have been sold
Different parts of a bond:
There are 3 parts to a MVD surety bond. The Principal "YOU", The Surety Company, and the Obligee. The Principal is the business or individual applying for the MVD Surety Bond. The Obligee is the individual or entity requiring the Surety Bond and the Surety Company is the company who provides the Surety Bond coverage.
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New York MVD Bond Requirements and Information
The surety bond amounts required are as follows:
$20,000 – Retail or Wholesale Motor Vehicle Dealer (other than new) that sold 50 or fewer vehicles in the previous calendar year
$100,000 – Retail or Wholesale Motor Vehicle Dealer (other than new) that sold more than 50 vehicles in the previous calendar year
The dollar amount of the bond required to be maintained by dealers applying to become, or to remain, registered as a new motor vehicle dealer remains unchanged at $50,000.
Original dealer applicants cannot be approved on or after March 28, 2017 unless a bond has been submitted in compliance with the new law. Applications received prior to March 28th may require the submittal of an amended bond if the application is still in process on or after March 28th. Applicants are encouraged to secure the higher bond amount to minimize disruption in their approval process.
The law also requires that any existing dealer (other than New Motor Vehicle Dealers) shall be required to provide surety bonds that comply with these new requirements upon the renewal, replacement, alteration, or extension of such dealer’s current surety bond.