Bad Credit? Save Money on Your Surety Bond
How to Save Money on Surety Bonds
A surety bond is three party agreement that is basically an extension of credit guaranteeing that one party will live up to the terms of the underlying agreement or the surety company (third party) will pay up to the penalty amount of the bond on the first party's behalf. Surety Bonds are not insurance, the party the bond is guaranteeing is held to indemnify and hold harmless the surety company and will be required to repay any amounts paid out on their behalf. Here are six easy steps toward saving money if you need a surety bond.
Apply online.There is no cost or obligation to do this, and the application process will go a lot faster if the application is legible (as it is when submitted electronically). Also, companies may give you a free rate quote when you submit an application online.
Help the underwriter determine the kind of bond you need.Provide all the information the application calls for. Leaving out information will complicate and lengthen the process, possibly even adding to your costs. The term "surety bond" is rather vague and doesn’t give the underwriter enough information to ascertain the type of bond that is right for you. That's why he will need a fully filled out application.
Have assets.Underwriters will consider a range of factors when pre-qualifying an application. These considerations include an applicant’s character, collateral, creditworthiness and business experience, as well as business and personal financial information. Underwriters also examine an applicant’s capital, licensure, business structure, and financial stability in order to determine his/her ability to meet the bonded obligation.
Get a low rate on your bond.Typically, your cost will be based on your credit score and financial stability. Increasing your credit score by paying your bills at the right time and keeping the balance on your credit cards below 30% of their limit will allow you to receive a lower rate on your loan for a surety bond. Your credit rating is important, because a surety bond is like a line of credit. Surety companies give better premium rates to applicants with good credit, because they consider them less of a risk.
Verify all your contact Information.If an underwriter cannot reach you, some of his questions may go unanswered. This can affect the price of your bond or can cause your bond to be denied.
Extend your bond for additional years.By adding time to your bond, you can receive a discount on your premium. The rate of the bond will remain the same for the term of the bond. It may change at renewal. Paying the renewal premium will automatically renew your bond.
- Be aware of agencies tacking on fees or having hidden fees. Ask the agent if there are any broker or admin fees included in your quote. There are many unscrupulous agents who will double and sometimes triple the rate charged by the surety and pocket the overage.
Video: How to get a Surety Bond in 5 Minutes!
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