New York MVD Bond Dealer bond

New York MVD Bond Definition

Before getting started, it’s worth noting that MVD bonds can also be referred to as:

    • Auto dealer bond

      • Car dealer bond

        • Used car dealer bond

          • Dealer bond

            • DMV bond

              • Bond for dealer’s license

                • Motor vehicle bond

                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

                • A New York MVD bond protects consumers from shady business practices like: 
                • Misrepresenting the vehicle condition
                • Selling a stolen vehicle
                • Issuing a fraudulent certificate of title
                • Falsifying or omitting details on the repair or accident history of the vehicle
                • Failing to pay the required motor vehicle fees (such as title or registration)
                • Selling a car that is clear of the prior owner’s interest and liens
                • Not following the required tax laws
                • Not fulfilling a warranty
                • Not reporting the sale of a vehicle

                Every New Your MVD bond has three parties involved in its issuing:

                  • Principal. This automotive dealer who buys the New York MVD bond.

                    • Obligee. The party who requires dealerships obtain the bond (usually this is a government agency).

                      • Surety. The bond company who issues the New York MVD bond and guarantees to the obligee that the principal will comply with all bond requirements.  

                      Example of a New York MVD Bond

                      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. 

                      What to Keep in Mind When Shopping for a New York MVD Bond

                      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.

                        • Bonding capacity. Sometimes referred to as the bonding amount, the bonding capacity represents the highest amount an individual can claim if the principal is found to have done something wrong. 

                          • Bond premium. The bond premium represents how much it will cost to purchase an MVD bond.

                            • Bond term. Bond terms vary on a state to state basis, most bond terms only last a year and have to be renewed accordingly. 

                            Apply online for a New York MVD bond today!