Every motor vehicle dealer in Colorado is required to hold a $50,000 Colorado auto dealer bond. So how do you save the most? There are several things you can do to make sure you’re getting the best price for your Colorado dealer bond.
How Much Does a Colorado Auto Dealer Bond Cost?
The typical cost for a Colorado dealer bond is between $250 – $3,500 per year. There are several factors that can impact that rate. We will teach you exactly what you need to know in order to get the lowest cost for a Colorado motor vehicle bond.
What Can Affect the Price for a Colorado Dealer Bond?
Credit Score
The factor with the biggest impact on your price for a Colorado auto dealer bond is your credit score. The companies that provide bonds view your credit score as an indication of how likely you are to have issues down the road with your dealership. If you have a high credit score, bond providers believe it’s less likely that you’ll have a claim against your bond. If you have a low credit score, they believe that likeliness is higher. Therefore, the higher your credit score, the lower your cost for a Colorado dealer bond.
With a high credit score, you should get a price on the lower end of the price range for a Colorado auto dealer bond, which is $250 per year. If you have credit issues like large debts, missed payments, or delinquent accounts, the price can increase significantly, up to about $3,500 per year on the high end. Every dollar counts in this business, so we will give you some tips to get you down to the $250 price for your Colorado dealer bond.
Bond Provider
Another factor that impacts the price for a Colorado motor vehicle bond is which company you use for your bond. Many dealers get one quote and stop there, but that is not the smartest way to shop for a Colorado dealer bond. You want to get quotes from multiple bond companies, and we’ll show you exactly how to do that.
Prior Claims
Dealers that have had past claims against their dealer bond may pay more for their bond in subsequent years. Just as an at-fault accident on your driving record increases your personal auto insurance rates, claims against your dealer bond may increase your dealer bond rates. You should do whatever you can to avoid a bond claim, if at all possible, so it doesn’t impact your dealer bond rates in the future. Keep reading for tips to avoid having any claims against your dealer bond.
Years of Experience
This is another factor that we can equate to your personal auto insurance… Just as a new driver pays more for personal auto insurance, a new dealer with no experience may pay more for their dealer bond. Bond companies view a more experienced dealer as lower risk, as they have proven themselves over the years. On the flip side, a dealer with no experience is viewed as more risky, as they haven’t proven themselves. New dealers may not know all of the ins and outs to the auto business, including how to avoid claims against their dealer bond. The more experience a dealer has, the less they could pay for their dealer bond.
Tips to Save on Your Colorado Auto Dealer Bond
Now we know what factors affect the price of a Colorado dealer bond, so what can you do to get the best price for your dealer bond?
1. Raise your Credit Score
The most important thing you can do is improve your credit score. Things like paying down your credit card debt, making sure you don’t miss any payments, and not opening new accounts are helpful to increase your score. There is a lot that goes into it, so we have another post dedicated just to improving your credit score. If you improve your credit score, you will get a better price for your dealer bond. Plus, you’ll get better rates on loans, credit cards, mortgages, etc. – so it’s a win-win!
2. Use a Bond Broker to Shop Around
The second thing that you must do is to use a bond broker for your Colorado auto dealer bond. What is the benefit of using a broker? When you use a bond broker to shop for your bond, they instantly shop around with multiple bond providers to find you the best rate available. This takes all of the work off of your plate, and saves you both time and money. Plus, it doesn’t cost you any extra! The bond provider will pay a small commission to the broker, but you don’t pay more!
Which bond broker should you use? One broker that comes highly recommended is Colorado Dealer Insurance. They specialize in finding the best rates for Colorado dealer bonds and Colorado dealer insurance. They can help you save money on both!
3. Avoid Claims Against Your Dealer Bond
This one is very important, so pay attention! If you have a claim against your dealer bond, you will pay more for your Colorado auto dealer bond in subsequent years. How do you avoid claims against your dealer bond? It’s all pretty obvious and should be something that you’re already practicing, assuming you’re not running an unethical dealership. There’s an overview below, and we have an entire guide for how to avoid claims against your Colorado dealer bond.
Overall, you just need to do good business. Ensure your dealership does not engage in any acts of fraud or any illegal acts. That includes you and anyone associated with your dealership. Be prompt when paying sellers of vehicles, as well as when delivering vehicles to customers. Always be upfront and honest – don’t hide vehicle issues, whether mechanical issues or problems with titles or other documentation. Finally, make sure to transfer titles of sold vehicles in a prompt and timely manner.
4. Stay in Business
Obviously, this one isn’t really an actionable tip. Since years of experience has an effect on your Colorado dealer bond price, you may start to pay less as you’ve been in the business longer. Although there’s nothing you can do about this factor right now, over time the additional experience may start to pay off!
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