Collateral Financing

I read in an article that some bail bondsman maybe interested in financing their collateral bonds.

This is just my personal opinion,but I can't see this being a good idea.

what do you all think?

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R&R
Professional Skip Trace Service
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When you say financing their collateral bonds, what do you mean exactly by financing? Collateral on a bond is generally something of value being held to cover the face amount of the bond in case of forfeiture. How could a "collateral bond" be financed? Can you elaborate?

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Joshua P. Woodby
P.I./Surety Agent/Washington Co. TN Appointed Process Server
Owner, A Beagle Investigations and Process Service
TN P.I. License #6232, TN P.I. Company License #1496
Senior Agent, A Bail Away Bonding Company Inc.
T.A.P.B.A. Certification Always Current

In some states collateral can also be used to secure the bond premium. Sometimes, especially on larger bonds, the defendant or their indemnitor may not have the full premium to get the defendant out of jail. Thus, the agent "finances" the premium. If the premium isn't paid, the agent takes the collateral to cover the balance.

This is another law that varies by state, so make sure it is legal in your state before doing so.

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Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

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R&R
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The only state I am aware of that requires full premium up front is Indiana. I would appreciate if anyone knows of any other state that does NOT require the full premium to be paid before the defendant is released.

Colorado doesn't require the premium to be paid up front. We can charge any amount up to 15%. Discounting, no collateral, and financing are common, especially in the high-competition areas.

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Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

In our state of North Carolina, you cannot offer any discount or reduced rate on a set bond or premium,and the obligor needs to pay 10% of that in order to be released from jail. (this is where the Collateral Financing may or maynot come into play)


Kathy, our state requires that the premium cannot exceed 15% too!

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R&R
Professional Skip Trace Service
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Kitty,

I'm a little confused. You state that the bail agent can not offer a reduced rate or discount on the "set bond" or "premium." The co signer must pay 10% of that to get the defendant released.

So are you saying that they have to pay at least 10% of the bail premium? Or are you saying the normal premium rate is 10% of the total bail amount but, it can not exceed 15%? And they have to pay the full bail premium up front before being released?

In general when I talk of bail bond financing, it is the terms of financing of the bail premium itself. Collateral if taken, is usually a separate issue to guarantee appearance on larger bail amounts.

We very often will get the full premium on large bonds, $5,000 to even $10,000 dollars in premium up front in full. We will also take real estate as collateral to guarantee the full value of the bond against an FTA.

We do less premium financing than others. In this economy, more and more look good on paper but can't keep up with the payments.

Most bail bond premiums are ten percent of the full bail amount, for example, if the full bail amount is $10,000.00, the premium (fee) for the bail bond is $1,000.00; this $1,000.00 amount, is what it will take for the principal to be released from jail in our state.

Wow, i'm surprised that your state requires the full amount up front!

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R&R
Professional Skip Trace Service
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In our state of North Carolina, you cannot offer any discount or reduced rate on a set bond or premium,and the obligor needs to pay 10% of that in order to be released from jail.

This is the part that confused me.

So NC is like most states then. The surety has a filed rate that does not exceed 15% of the total bail amount.

And no, CA does not requrie that we collect the full bail premium up front before the defendant can be released. The only state I am aware of that does require full bail premium paid in full up front is Indiana.