You must have been wondering how auto dealer bonds work, and if they are one of those phony bond schemes or money-back guarantee schemes that you have watched on television. Do not wonder too far away, auto dealer bonds are a legal form of insurance policies that are issued by various states in order to protect buyers form the unscrupulous activities of car dealers.
When auto dealer bonds are bought the Bond Company usually evaluates the finances, credit and commercial status of the company and then sets a premium for the cost of the bond. There are often cases or scenarios when an auto dealer does not fulfill the warranty agreement that a buyer of a product was supposed to enjoy, the customer, therefore, suffers a form of financial loss in this regards due to wrong evaluation of the car. In this case, the customer will need to prove that he has suffered some form of loss. A copy of a contract written agreement and a comprehensive information about the losses is usually required.
Normally a customer is deemed to have provided enough documentations if he or she provides a written bill of sale, proof of cash deposit, contract between the buyer and the dealer or a copy of contract. After the documentation, the claim will be evaluated and if the customer is deemed to have suffered any loss, the customer will be reimbursed up to the value of the coverage provided by the bond.