How to Get an Auto Dealer License

How to Get an Auto Dealer License

What is an auto dealer license? 

An auto dealer license allows you to become certified in your state to buy and sell cars. Anyone in the business of buying and selling cars needs to be licensed. Depending on the state in which your business operates, there are different requirements that have to be met before you can become a licensed auto dealer. 

What are the requirements for an auto dealer license?

Many states require that licensed dealerships are bonded because it protects the dealer’s customers from any fraudulent behavior and verifies that the dealership is financially sound. Depending on the state and the type of vehicles being bought and sold, the required surety bond could be anywhere from $5,000 to $100,000. Therefore, applicants are always encouraged to verify the bond amount with their licensing authority

In addition to acquiring an auto dealer bond, applicants must verify ownership of the lot that the business operates on and provide proof of liability insurance. To verify ownership of the lot, many states require a copy of the deed or lease agreement for the lot. Applicants may also need to provide photos of their place of business and signage, depending on the state. Some states require the applicant to complete an auto dealer education course through the state agency providing the license.

How much does an auto dealer license cost?

There are typically three fees that can be expected when acquiring an auto dealer license, however, additional fees may be added for an auto dealer education course and fingerprinting.

  • States will require an initial application fee. This typically ranges from $175 to $700.
  • States also charge a $50 to $100 fee for every license plate that a dealership needs for its vehicles.
  • A renewal fee will be charged at the end of each term to keep the license active. This could occur once a year or once every two years, contingent upon your license terms.

How do I apply for an auto dealer license?

Because licensing for auto dealers is handled at the state level, the exact process may vary. However, the following is typically required to apply for an auto dealer license:

  • Contact the agency in your state that handles auto dealer license. For example, several states license auto dealers through the Department of Motor Vehicles (DMV).
  • Acquire and complete your state’s application form. As mentioned previously, the application requires the applicant to meet a number of requirements like having a valid business license and auto dealer bond. States have different licenses for different types of dealerships. Make sure your application fits your business. Some examples of different license types include:
    • Franchise- Dealerships that operate under agreements with manufacturers or distributors.
    • Independent (GDN)- A basic dealer license that allows for the buying and selling of used vehicles.
  • Submit your completed application and payment of all fees.  

Again, this process will vary from state to state, because each department that provides auto dealer licenses has different requirements. Contact your state’s DMV for information on how to begin the process of becoming a licensed auto dealer. If your state’s DMV does not handle licensing, they should be able to point you in the right direction.

Need to get a surety bond for your auto dealer license?

The team of experts at SuretyBonds.com have years of experience issuing auto dealer bonds nationwide, meaning they know what it takes to get you bonded while saving you time and money. Visit our auto dealer bond page or give us a call at 1 (800) 308-4358 to get your free, no obligation quote today!

About the Author

Mel Frieders
Mel is a junior at the University of Missouri - Columbia studying Journalism with an emphasis on strategic communications. She is a marketing intern for SuretyBonds.com, a leading provider of online bonding for clients nationwide.