What is a Deferred Deposit Surety Bond?
Deferred Deposit Surety Bonds, also referred to as Payday Lender Surety Bonds, are required for companies known as deferred deposit companies who wish to provide payday loan services to their clients.
Payday loan services entail a company offering their clients small, unsecured, high-interest short-term cash loans. Clients typically provide the deferred deposit companies with a post-dated check for the amount they wish to borrow, including interest, which is to be cashed after the their next scheduled payday. Deferred Deposit Surety Bonds ensure that these companies do not issue loans which exceed the statutorily allotted amount, or the amount deemed feasibly returnable based on their client’s income, and function in accordance to all applicable laws and regulations. These license and permit surety bonds also guarantee that these companies do not charge any more interest than allowed.
Which states require a Deferred Deposit Surety Bond?
Pacific Surety proudly offers Deferred Deposit Surety Bonds in the following states:
If you do not see your state listed, please contact us and our knowledgeable underwriters will assist you.
What is the bond amount for a Deferred Deposit Surety Bond?
Bond amounts for Deferred Deposit Surety Bonds vary and are set by the local rules and statutes regulating the industry. Therefore, bond amounts and requirements will fluctuate from state to state. Please contact us with specific questions, and our knowledgeable underwriting staff will assist you.
How much does a Deferred Deposit Surety Bond cost?
Pricing for Deferred Deposit Surety Bonds will vary, and your premium will be based on the following factors:
- State the bond is required in
- Amount of the bond
- Term length of the bond
- Personal credit for anyone with at least a 10% ownership stake in the business
Individuals with good credit can expect to pay between 1%-5% of the bond amount. Qualified applicants could pay as little as $100 annually for a $10,000 Deferred Deposit Surety Bond. To find out how much your bond is going to cost, please complete our online application for your free, no obligation price quote.
Can I get a Deferred Deposit Surety Bond with bad credit?
Pacific Surety offers a wide range of approvals, regardless of credit, for Deferred Deposit Surety Bonds. With our strong surety relationships, we have the ability to approve 99% of applicants, regardless of how bad their credit is. Our knowledgeable underwriting staff will work with you to ensure you receive the lowest possible pricing for your bond. Applicants with substandard credit can expect to pay 5%-10% of the bond amount in premium. To see what rate you will qualify for, please complete our online application for your free, no obligation price quote.
How do I purchase a Deferred Deposit Surety Bond?
The first step is to complete our quick online application for your free, no obligation bond quote. Submission takes only five minutes, and our underwriting staff will be in contact with you within a couple of hours with pricing. If you prefer to speak with our knowledgeable staff, please call 1-866-722-7873 and one of our Underwriters will assist you in applying for your bond.
After you receive approval, you must sign an indemnity agreement with the surety and provide payment for your bond premium. In most cases, we can issue bonds the same day we receive your signed documents and payment.
Who does a Deferred Deposit Surety Bond protect?
Unlike insurance, which protects you, your home or your business, Deferred Deposit Surety Bonds protect the obligee (entity requiring the bond). The deferred deposit surety bond guarantees that the principal does not issue loans which exceed the statutorily allotted amount, or the amount deemed feasibly returnable based on their client’s income. Should these laws and regulations be violated, a claim can be filed by the obligee with the surety company for relief. If the claim is valid, the surety will pay up to the penal sum of the bond to resolve the claim. You are then required to reimburse the surety for all monies paid out, including any attorney fees incurred by the surety in the defense of the claim.
Claims can be detrimental to your business. Not only do they cause financial harm, they make it very difficult, if not impossible, to get bonded again.