What Is a Dealer License for Car Auctions?
A dealer license for car auctions allows you to buy and sell vehicles at special dealer-only auctions. These auctions offer detailed condition reports, higher quality vehicles and a wide variety of options.
Continue reading to learn about auction dealer license requirements and how you can find information specific to your state.
What License Do I Need?
To attend dealer-only auctions, you’ll need a retail or wholesaler motor vehicle dealer license issued by your state. Some states require different dealer licenses based on the type of vehicles you sell — such as motorcycles or used cars.
With a retail license, you’ll need a formal dealership with a showroom and lot to sell to the public. Many auction dealers choose a wholesaler dealer license instead, which allows you to buy and sell with dealers and at auctions, but not to the general public.
Once licensed, you don’t need a separate permit for car auctions. However, the type of dealer license you have may limit the auctions you can participate in. For example, a motorcycle dealer license will allow you only to buy motorcycles at auctions.
What Are the Benefits of Getting a Dealer License for Auctions?
With a dealer license, you gain exclusive access to dealer-only auctions with below-market prices. However, this license also offers the following benefits:
- Access to dealer plates, which allow you to drive vehicles purchased for resale
- Exemption from state tax or registration fees on vehicles sold at auction
- Access to wholesale parts from OEM franchise dealers and automotive parts suppliers
- Professional credibility
- Legal protection
Benefits of a Dealer License for Auctions
Do Dealer License Requirements Vary By State?
Yes, your specific application process will depend on your state’s requirements.
You can find licensing information on your state’s website. Or, check out our License Guide Library for more detailed information on becoming an auto dealer in specific states.
Can I Get a Dealer License Without a Lot?
No, most states require a copy of your deed or leasing agreement to verify your retail business location for your license. Depending on your business type, you might also need to meet size and signage requirements.
Wholesale dealers typically don’t need a traditional display showroom, but you’ll still need proof of a physical office in the state. Some states do require a lot or other designated storage for vehicles.
If you’re applying for a dealer license to purchase cars at auction and resell them as a side hustle, you’ll likely need to establish a sole proprietorship. All business structures must be registered with the state.
However, a sole proprietorship offers you the least protection. If someone files a claim against your business, your personal assets will be on the line.
Do I Need Insurance or a Surety Bond?
Yes, you typically need both, especially if you’re opening a physical dealership.
Most states require proof of a general liability insurance policy for dealerships. Even if you are running a small car resale business, it could be beneficial and/or mandatory to purchase insurance to protect your company from claims.
You’ll also likely need to purchase an auto dealer surety bond, typically ranging from $25,000–$100,000 in required coverage. Some states, such as Nebraska, require a separate auction dealer bond.
Where Can I Buy My Surety Bond?
You must purchase your bond from an authorized surety company. As an online agency, SuretyBonds.com works with the top surety providers nationwide to find you the best pricing.
Surety bonds typically cost just 1–4% of your coverage amount. However, bond coverage requirements vary by state.
How to Apply for a License
Once insured and bonded, you’re ready to begin the application process. You’ll need to submit the following materials via your state’s licensing system:
- Proof of business registration
- General liability insurance
- Surety bond form
- Background check
- Registration fee
The license process will vary depending on your state and license type. Check with your state’s agency for specific requirements.
How to Apply for a Dealer License for Auctions
How Much Does It Cost to Get an Auction Dealer License?
The costs associated with an auction vehicle dealer license vary by state, but typically range from $5,000 to $15,000. This includes application fees, bond premiums, insurance costs and business establishment requirements.
How Do I Renew My License?
Most dealer licenses remain active for 1–2 years. You’ll typically receive an email from your local DMV or licensing agency with renewal information.
You’ll also need to renew your surety bond. When you work with SuretyBonds.com, we’ll send you renewal reminders starting 90 days before your auction dealer bond expires.
What If a Salvage Auction Vehicle Has Title Issues?
Some auctions are specifically for vehicles that have been declared salvage by insurance companies. You can buy these cars at a much lower price than market value, but they may come with title issues.
If the original vehicle title is missing or your state requires proof of ownership, then you’ll likely need a bonded title.
To sell a vehicle for road use, you’ll typically need to convert a salvage title to a rebuilt title. Some states may require a title bond if the repair receipts are incomplete or if the original salvage certificate was lost during the rebuild process.