If you want to sell motor vehicles, or you want to be involved in the business of selling, buying, or displaying for sale motor vehicles, then you will have to get your car dealer license (also known as auto dealer license or motor vehicle dealer license.)
Short on time? Read our Motor Vehicle Dealer License FAQ
Not sure if you need a dealer license? Check out this post on selling cars without a license.
Part of getting your license involves purchasing a car dealer bond (also known as a motor vehicle dealer bond or an auto dealer bond.) The following five steps explain how to get your license and your bond so you start a car dealership. Make sure you check your state guidelines for specific rules and regulations.
How to get a Car Dealer License
Step #1: Contact Your Local DMV or DOL
Every state has individual requirements for becoming a car dealer. Your local DMV (Department of Motor Vehicles) or DOL (Department of Licensing) will know what those requirements are, so contacting them is the first step.
Your state will familiarize you with what is needed to get your dealer license. They will also give you any necessary paperwork to fill out and provide you with further guidance.
Recognize that there are different types of dealer licenses to apply for:
- New vehicle dealer license
- Used vehicle dealer license
- Wholesale vehicle dealer license
- Motorcycle dealer license
Step #2: Meet Requirements
Depending on the state you live in, this could amount to a long list. Before getting your car dealer license, most states will require you to fulfill some general guidelines like securing a properly zoned location and getting your location and business approved.
Other common requirements include:
- Registering your business
- Meeting zoning requirements
- Attending a pre-licensing seminar
- Providing proof of insurance
- Passing a background check
Worried about a felony or conviction on your record? Check out this post on Getting a Dealer License With a Felony.
Some states might require further steps, like passing a car dealer license test or providing a hazardous waste generator number if you have a repair shop on site.
Step #3: Complete Car Dealer License Application
Your local DMV will provide you with the proper car dealer license application for your business. The U.S. Small Business Administration (SBA) can be a valuable asset in this part of the process too.
Before sending in your car dealer license application, be sure to double-check that you filled out all areas and signed in all the necessary places. Applications can take a long time to process, and missing information only lengthens the time it will take to get approved.
Step #4: Purchase Motor Vehicle Dealer Bond
Not sure how to get an Auto Dealer Bond? Use this interactive tool to help you out.
Almost every state will require you to purchase a car dealer bond. A car dealer bond is a type of surety bond that protects your customers. If your customers feel you are running an unethical business, they can make a claim against your bond.
The best way to find out what you’ll pay for your bond is to get a free quote.
Do not overlook this step. Obtaining a car dealer bond is vital to ensuring your customers that you will stand in good faith behind your actions. The bond guarantees your customers they will be protected should something go awry in a business transaction.
The Surety Solutions blog has individual blog posts on how to obtain a car dealer bond for almost every state. Check out our tutorials to get started.
Step #5: Submit Car Dealer Application
Send your car dealer license application, car dealer bond, proof of insurance, and all other necessary papers to your local DMV or Auto Dealer Licensing Service Department…and wait to be approved!