When customers purchase an automobile, they may need assurance that they are dealing with a quality auto dealer, especially if they are buying a used vehicle. A motor vehicle bond provides consumers protection against a bad or fraudulent deal. A vehicle surety bond is usually held by dealers and provides protection and comfort to buyers who are making a vehicle purchase. Usually, a surety bond includes three parties who agree to the terms of the bond. The first party is called the surety and they agree to pay the second party if the third party defaults on a contract. This type of bond is a type of insurance. A vehicle bond helps protect car buyers and add credibility to the process of buying and selling a vehicle.
There are different types of motor vehicle bonds. The type required for a particular deal will depend on the purpose of the deal. Auctioneer bonds, auto dealer bonds, used-car dealer bonds, and auto title bonds are all used to deal with motor vehicle transactions. Some of these bonds require a credit approval before they can be purchased. If an individual has poor credit, the purchase price of a bond may be increased. A car dealer’s bond helps increase a buyer’s confidence in the transaction, as well as ensuring the transaction meets all local and state requirements.
States require a surety bond when a vehicle is sold by an auto dealer. This gives the state a record of dealings with both auto dealerships and their owners. It also provides a credit history and background for the dealer. The vehicle surety bond protects the consumer against illegal or inappropriate actions by a used or new car dealer. Also, if a business plans on selling vehicles at auction, they will be required to get an auctioneer surety bond. This bond protects consumers by providing coverage if there is fraud or a problem with the transaction.
If someone wants to sell their vehicle but does not have the proper title documents, the state will require that the seller gets a defective title bond. This type of bond produces new title documents for a vehicle and verifies that the seller does own the vehicle and has legal title. It also provides the seller legal authority to transfer the title to the new owner. Older vehicles may not have title documents or the original title documents may have been damaged by fire or completely destroyed. A title bond provides assurance that the vehicle is properly titled and the current owner is legally able to sell the vehicle and transfer title.
Before selling a vehicle, it is a good idea to check with the state agency in charge of licensing auto dealers to see if a vehicle bond is necessary. There are several factors which impact the cost of a motor vehicle bond. These include the owner’s application and their credit, their financial credentials, the required amount of surety, and whether or not they choose to finance the premium for the bond.
Having a motor vehicle surety bond helps protect both the consumer and the auto dealer. These protections ensure the auto buying process is as honest as possible.