What is an Rhode Island Car Dealer Bond?
Rhode Island Car Dealer Bonds are required by Rhode Island's Dealers License and Regulation Office to obtain your Dealer license. The MVD Bond amount for the sale of New and used vehicles is set at $50,000. 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:
$50,000 surety bond for New and Used Motor Vehicle Dealers, Public Consignment Auction Dealers and any other types of dealer
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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Rhode Island MVD Bond Requirements and Information:
1. The proposed dealership name and location must be approved by the Dealers’ License & Regulation Office prior to making this application. All used car dealerships must include “Auto Sales” in their name.
2. Application, financial statement prepared by a certified public accountant (CPA), and employee forms must be completed in full, signed and notarized, and accompanied by an approved line of credit for fifty thousand dollars ($50,000) from a financial institution, in the dealership’s name.
3. $50,000 surety bond (from insurance company) completed, signed, and notarized in the D/BA name.
4. Each owner, partner, or corporate officer must submit a Bureau of Criminal Identification (BCI), issued by the Attorney General’s Office, 150 South Main Street, Providence, RI, (401) 274-4400. If the individual is not a Rhode Island resident or has moved into the state within the past five (5) years, the individual must obtain a criminal record check, performed by the appropriate state agency from the other state, in addition to the Rhode Island BCI. Attach a picture ID.
5. Copy of formal lease agreement issued to the dealership (for one-year minimum) stating total square footage of building and outside area, etc., signed and notarized, or a copy of deed (if property is owned by the dealership). 2,400 sq. ft. minimum size building and 2,400 sq. ft. minimum size for outside (total building square footage can be on separate levels).
6. Copy of city/town license (second-hand license), if required, otherwise, a letter of zoning approval from city/town approving the sales of motor vehicles at that proposed dealership address.
7. Four (4) pictures of the outside of building from all angles, to include the entire building and lot display area.
8. For corporation only: Copy of articles of incorporation, copy of the minutes showing the election of all corporate officers, and a copy of fictitious name report (if operating under D/B/A name) and a letter of good standing from the Rhode Island Secretary of State (LLC requires an operating agreement).
9. If a franchise dealer, then you must first comply with Rhode Island General Law §31-5.1-4.2 (having the Manufacturer/Distributor Issue Letter(s) of Intent). If no protests are received after the 30-day protest period, your application will go before the board. Manufacturer/Distributor must be licenses with the Dealers’ License & Regulation Office. Upon our receipt of the above, your application will be investigated and scheduled for a hearing before our Dealer’s Hearing Board. If granted a license, the following documents must be received in this office within thirty (30) days in order to finalize the application and be issued a dealer’s license.
10. Call the Licensing Aide (401) 462-5732 to request license and plate numbers that have been assigned.
11. You must contact the Rhode Island Division of Taxation to order forms, (401) 574-8869 or 574-8895, located at One Capitol Hill, Providence, to receive your sales tax permit and blue forms. Please submit a copy of tax permit and blue forms to this office.
12. Picture of 24 sq. ft. sign (minimum size), stating the exact dealership name. Use the D/B/A name, if you are using one.
13. $302.50 License Fee (money order or check), made payable to “Dealers’ License & Regulation Office.”
14. Business telephone number.
15. Insurance filing (GU-1338 certificate) on dealer plate insurance coverage, (D/B/A name only) original certificate must be sent to the Financial Responsibility Office, located within the Cranston DMV location. For information, contact the Financial Responsibility Office (401) 462-1384 or 462-5186.
16. If franchise dealer, you must supply the Dealer Agreement.
17. Fax a blank Bill of Sale form to the Dealers’ License & Regulation Office (401) 462-5789, for approval.
18. After requirements are completed by Investigator, a Licensing Aide will contact you to make an appointment to finalize.