Before getting started, it’s worth noting that MVD bonds can also be referred to as:
MVD bonds are a legal requirement that helps keep automotive dealers compliant. A New York MVD bond is a surety bond specifically required by the state of New York in order to give consumers peace of mind that the dealership they’re shopping at is licensed and follows the law. Essentially, MCD bonds ensure that the dealer complies with the conditions of any contract made by a licensee in connection with the sale or exchange of any motor vehicle and that the dealer won’t violate any of the provisions of law relating to the conduct of the business for which it is licensed.
In New York, the MVD bond amount for both used and new vehicles is set at the following amounts for both retail or wholesale motor vehicle dealers:
$20,000: For dealers that sold 50 or fewer vehicles in the previous calendar year
$100,000: For dealers that sold more than 50 vehicles in the previous calendar year
Every New Your MVD bond has three parties involved in its issuing:
To better understand how New York MVD bonds work, let’s look at an example of how these bonds can be used.
Let’s say that Janice just moved to New York to start an exciting new job. She moved across the country so she sold her car before she left and now needs to buy a new one so she can drive to her new job on Monday morning. Janice decides to stop by her local used car dealership to buy a used SUV.
Fast forward and it’s Janice’s first day of work. Her car breaks down and she can’t make it to work on time. She loses a day’s wages, is stuck with a big repair bill, and feels embarrassed in front of her new coworkers. What can Janice do?
Janice may be able to file a claim against the dealership’s New York MVD bond if she can prove the dealer falsified or omitted details on the repair or accident history of the vehicle. The claim she files can help cover repairs, lost wages, and other costs associated with the car malfunctioning if the surety approves the claim. That claim can be as high as $100,000 if the dealer sold more than 50 vehicles in the previous calendar year (if they sold less than 50 vehicles, the claim amount would be up to $20,000).
The surety will pay out the claim to Janice, but the dealership is still on the hook here. The dealer will need to repay that claim amount to the surety.
If you need a New York MVD bond in order to run your dealership business, it can be helpful to understand the differences between the bonding capacity, premium, and term of each bond.