Motor Vehicle Sales Finance Company ($25,000) Bond - Statewide in Delaware

Brief Summary

Dealers who carry their own retail installment contracts are often surprised to learn they count as a sales finance company in Delaware. The bond is a flat $25,000 for every licensee, written on the State Bank Commissioner's own form, and an annual premium keeps that $25,000 in your business instead of in a letter of credit.

Delaware licenses sales finance companies under Title 5, Chapter 29 of the Delaware Code, and section 2914(a) requires every licensee to file a $25,000 corporate surety bond. The bond runs to the State for the benefit of the Office of the State Bank Commissioner and for consumers injured by the licensee's wrongful act, default, fraud or misrepresentation.

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How to Apply for a Motor Vehicle Sales Finance Company ($25,000) Bond:

• Confirm whether you create and hold retail installment contracts. If so, Chapter 29 likely applies even if you are a dealer.
• Check the exemptions for banking organizations, federal credit unions and insurance companies.
• Have the legal name of the company exactly as it will appear on the license application.
• Complete the bond application with owner information for the credit review and pay the premium.
• Have the surety execute the $25,000 Motor Vehicle Sales Finance Company Surety Bond form published by the State Bank Commissioner.
• File the bond with the application, the $287.50 investigation fee and the $287.50 license fee for each office.

Detailed Information About the Delaware Motor Vehicle Sales Finance Company ($25,000) Bond:

Dealers are often covered

Under 5 Del. C. section 2901(9), a sales finance company includes a retail seller engaged, in whole or in part, in the business of creating and holding retail installment contracts. A dealership that writes and keeps its own contracts falls within that definition and needs the license and the bond. Banking organizations, federal credit unions and insurance companies are exempt under section 2902(a), as are others acting under another applicable law, and the Commissioner may exempt additional persons or classes.

The bond

Section 2914(a) sets the bond at a principal sum of $25,000, filed by a corporate surety. It runs to the State for the benefit of the Office of the State Bank Commissioner and for consumers harmed by the licensee. The state form limits consumer recovery to actual losses and excludes business creditors, service providers, agents and employees of the licensee. The surety pays valid claims within 90 days. The bond is continuous, and the surety may cancel on 30 days' written notice to the principal and the Office, while staying liable for losses that occurred while it was in force. At the Commissioner's discretion a $25,000 irrevocable letter of credit may be used instead under section 2914(b).

Fees, offices and renewal

The initial application carries a nonrefundable $287.50 investigation fee. The license fee is $287.50 per calendar year for the principal place of business plus $287.50 for each additional office, and each office needs its own license. Licenses expire on the last day of December, and renewal applications are due at least 30 days before expiration.

Eligibility and Requirements for a Delaware Motor Vehicle Sales Finance Company ($25,000) Bond:

• Bond amount of exactly $25,000 under 5 Del. C. section 2914(a).
• Corporate surety, with the State of Delaware, Office of the State Bank Commissioner as obligee.
• Bond term commensurate with the license period or continuous.
• A separate license for each office.
• Renewal filed at least 30 days before the December 31 expiration.

Delaware Motor Vehicle Sales Finance Company ($25,000) Bond FAQs:

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