Virginia Consumer Finance Company Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain Virginia Consumer Finance Company Bonds

At a Glance:

• Lowest Cost: $375 per year or $38 per month based on the applicant’s credit
• Bond Amount: $25,000
• Who Needs it: All consumer finance companies operating in Virginia
• Purpose: To ensure the public will receive compensation for any damages should the consumer finance company fail to comply with licensing law
• Who Regulates Consumer Finance Companies In Virginia: The Virginia State Corporation Commission

Background

Virginia statute 6.2-1501 requires all consumer finance companies operating in the state to obtain a license with the State Corporation Commission. The Virginia legislature enacted the licensing laws and regulations to ensure that consumer finance companies engage in ethical business practices. To provide financial security for the enforcement of the licensing law, consumer finance companies must purchase and maintain a $25,000 surety bond to be eligible for licensure.

What is the Purpose of the Virginia Consumer Finance Company Bond?

Virginia requires consumer finance companies to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the consumer finance company fails to comply with the regulations outlined in Virginia statutes Chapter 15. Specifically, the bond protects the public in the event the consumer finance company engages in any acts of fraud or mishandles consumer funds. In short, the bond is a type of insurance that protects the public if the consumer finance company breaks licensing laws.

How Can an Insurance Agent Obtain a Virginia Consumer Finance Company Surety Bond?

BondExchange makes obtaining a Virginia Consumer Finance Company Bond easy. Simply login to your account and use our keyword search to find the “consumer” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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Is a Credit Check Required for the Virginia Consumer Finance Company Bond?

Surety companies will run a credit check on the owners of the consumer finance company to determine eligibility and pricing for the Virginia Consumer Finance Company bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Virginia Consumer Finance Company Bond Cost?

The Virginia Consumer Finance Company bond can cost anywhere between $375 to $1,250 per year or $38 to $125 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $25,000 bond requirement.

$25,000 Consumer Finance Company Bond Cost

How Does Virginia Define “Consumer Finance Company?”

Virginia statute 6.2-1500 defines a consumer finance company as a business entity who makes loans to individuals for personal, family, household, or other non-business purposes.

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How do Consumer Finance Companies Apply for License in Virginia?

Consumer finance companies in Virginia must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.

License Period – The Virginia Consumer Finance License will not expire unless surrendered, suspended, or revoked

Step 1 – Purchase a Surety Bond

Consumer Finance Companies must purchase and maintain a $25,000 surety bond

Step 2 – Meet the Liquid Asset Requirements

Applicants for the Virginia Consumer Finance Company must at all times maintain at least $25,000 in unencumbered liquid assets. Applicants must submit a certificate verifying they meet this requirement when submitting their license application.

Step 3 – Complete the Application

All regulatory Virginia Consumer Finance Company License applications should be mailed to the following address:

State Corporation Commission
Bureau Of Financial Institutions
1300 East Main Street, Suite 800
Post Office Box 640
Richmond, Virginia  23218-0640

Consumer Finance Companies must complete the application in its entirety, and submit the following items:

• • Organizational chart detailing the company’s hierarchy
  • Personal Financial Report and Disclosure Statement (per company director/officer)
  • Employment and Business Affiliation Disclosure (per company director/officer)
  • Company business plan
  • Three business references
  • Authorization forms
  • Evidence of Registration with the Clerk of the State Corporation Commission

Consumer Finance Companies must pay a $500 fee when submitting their license application.

Do Virginia Consumer Finance Companies Need to Renew Their License?

No, because the Virginia Consumer Finance License will not expire unless surrendered, suspended, or revoked.

What Are the Insurance Requirements for the Virginia Consumer Finance Company License?

The State of Virginia does not require consumer finance companies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Consumer finance companies must purchase and maintain a $25,000 surety bond.

How Do Virginia Consumer Finance Companies File Their Bond?

Virginia consumer finance companies should mail the completed bond form, including the power of attorney, to the following address:

State Corporation Commission
Bureau Of Financial Institutions
1300 East Main Street, Suite 800
Post Office Box 640
Richmond, Virginia  23218-0640

The surety bond requires signatures from both the surety company that issues the bond and a representative from the consumer finance company. The surety company should include the following information on the bond form:

• Legal name of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond is signed

What Can Virginia Consumer Finance Companies Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, consumer finance companies in Virginia must follow all license regulations in the state, including some of the most important issues below that, tend to cause claims:

• Do not engage in any acts of fraud
• Do not breach any contracts made with consumers
• Pay all required taxes and fees

What Other Insurance Products Can Agents Offer Consumer Finance Companies in Virginia?

Virginia does not require consumer finance companies to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Virginia Consumer Finance Company Customers?

Virginia conveniently provides a public database to search for active consumer finance companies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.