How to Become a Motor Vehicle Dealer in Alabama
If you sell five or more cars per year in Alabama, you need a motor vehicle dealer license. The Alabama Department of Revenue – Motor Vehicle Division (ALDOR) oversees all dealers in the state.
Continue reading for step-by-step application instructions and answers to common questions.
Which License Do I Need?
Before applying, decide which license type best fits your operations.
| License | Description |
|---|---|
| New Dealer | Sells new vehicles to the public |
| Used Dealer | Sells pre-owned vehicles to the public |
| Wholesale Dealer | Buys and sells vehicles at dealer-only auctions |
| Rebuilder | Makes extensive vehicle repairs that may require a new VIN |
| Master Dealer | Can conduct business in any of these categories |
How Do I Get an Auto Dealer License in Alabama?
To get an auto dealer license in Alabama, follow the eight steps below.
Step 1: Establish your business
First, establish a permanent address for your dealership. You don’t have to be an Alabama resident to apply for an auto dealer license. However, you do need a physical place of business in the state.
Once you define your business’s legal structure, also register with the Secretary of State and get your Alabama sales tax number. You don’t have to be an Alabama resident to apply for an auto dealer license. However, you do need a physical place of business in the state. Establish a permanent address for your dealership.
Step 2: Purchase a surety bond
Next, get a $50,000 auto dealer bond. This is a financial guarantee that you’ll uphold state regulations.
Apply online for your free Alabama motor vehicle dealer bond quote today. Rates start at just $350.
Step 3: Get liability insurance
Buy a blanket liability insurance policy for all vehicles in your lot that meets the following minimum coverage limits:
- $25,000 bodily injury/person/accident
- $50,000 combined bodily injury/accident
- $25,000 property damage/accident or a combined single limit of $75,000/accident
Step 4: Apply online
Apply online through the Alabama Partner Registration Portal. There is no paper application option.
Step 5: Mail supporting documents
After completing the application, you’ll receive a transmittal sheet in the online portal. It’ll list the documents that need to be mailed to the ALDOR, including:
- Proof of a surety bond and insurance
- Proof of permanent business location and business IDs
- Business registration
- Photos of the business location (including the building, proper signage, hours of operation, and vehicle lot)
- Proof of power for the business location
- Zoning letter (if the building is in a residential area)
Mail all materials to:
Motor Vehicle Licensing
P.O. Box 327643
Montgomery, AL 36132-7643
The ALDOR may take 3-5 business days to process your application. Once approved, you will receive an email with your official, printable license.
Step 6: Become a designated agent
Next, complete the designated agent application and training. Wholesalers are exempt.
Once your agent application is approved, you’ll be able to process title applications through MyDMV.
Step 7: Get a business privilege license
Get a business privilege license from your local county licensing office. License fees vary by location.
Step 8: Buy dealer plates
Finally, purchase dealer plates for all vehicles in your lot through your MyDMV account.
The ALDOR limits the number of combined dealer and motorcycle plates you can buy based on your license and sales volume:
- New motor vehicle dealer: 35 plates
- Used motor vehicle dealers: 10 plates
- High-volume dealers: 25 additional plates if you completed 300 or more title transfers in the past year
You cannot request dealer plates until your privilege license is approved.
How Do I Renew My Dealer License?
You must renew your Alabama auto dealer license by October 1 annually. The ALDOR gives you a thirty-day grace period before you’re charged a late fee.
Log in to your MyDMV account to view the renewal materials. You’ll also need to provide proof of a continued surety bond and liability insurance policy.
How Much Does It Cost to Open a Dealership in Alabama?
You can expect to pay $1,797 to get an auto dealer license in Alabama. This includes the following fees.
| Fee Type | Cost |
|---|---|
| Surety Bond | $350+ per year |
| License Fee | $125 |
| Each Additional Location | $5 |
| Liability Insurance | $1,000–$3,000+ annually |
| Business Privilege License | $100–$300, varies by county |
| Business Registration Fee | $200 (LLC) |
| Dealer Plates | $25 per plate ($17 for motorcycle dealers) |
Your exact bond and insurance costs will depend on your credit score. If your dealership is larger, you may also need higher insurance coverage.
Alabama Auto Dealer FAQs
Do I Need a Lot to Sell Cars in Alabama?
If you sell vehicles to the public, you need a physical lot. Wholesale dealers are exempt.
Your dealership must be properly zoned and have:
- A permanent address
- Signs with your business’s name and operating hours
- A vehicle display area (lot or showroom)
- An office
Can I Make Off-Site Sales?
Yes, but you must purchase an off-site sale license at least 10 days prior. The fee is $25.
If you’re the organizer or host of an off-site sale, you’ll also need a facilitator license. As the facilitator, you must confirm that each participating dealer has an off-site sale license and list each license number on the application. If you’re both the facilitator and the dealer, you only need the off-site sale license.
Who Can Drive Cars with Dealer Plates?
Your dealership’s owners, partners, officers and employees can all legally drive cars with dealer plates at any time. Customers can test drive a dealer vehicle for up to 72 hours.
There are also a few special cases where dealer plates can be used:
- A dealer vehicle loaned to a customer while their vehicle is being serviced at the dealership
- Vehicles loaned to high schools for student driver education
- A dealer-owned heavy truck making one loaded trip (limited to 72 hours)
If you charge a fee for any of these, you can’t put dealer plates on the vehicles. You also cannot use dealer plates on rental cars, tow trucks or service vans.
How Can I View or Reprint My License?
You can reprint your license anytime by logging in to your MyDMV account. There’s no printing fee.
What If My Dealership Moves Locations?
If your address changes, update the information in MyDMV. You’ll need to submit a new insurance certificate, surety bond form and proof of location power.
What Law Regulates Alabama Vehicle Dealers?
All Alabama dealers must comply with Alabama Code Title 40, Chapter 12, Article 8. The following acts are strictly prohibited:
- Improperly handling vehicle titles
- Failing to keep the required records
- Selling stolen vehicles or parts
- Tampering with a vehicle’s odometer
- Filing false or fraudulent tax returns
- Not maintaining a legitimate business location
These violations are common reasons for bond claims.
More Resources
Last Updated: July 1, 2026
