Licensing Requirements

Anyone who sells five or more motor vehicles a year on a retail basis must be licensed as a dealer. Alabama has four categories of licenses for car dealers:

• New car dealer OR used car dealer (called retailers)

• Wholesaler

• Rebuilder

• Reconditioner

Retailers can sell to the public and are required to collect sales tax, so a sales tax number is required for that category prior to licensing.

There are two types of licenses you must have as a car dealer. The first is a regulatory license, which you get through the Alabama Department of Revenue by filling out an application (first read the instructions). You must obtain this license before applying for the second license.

The cost for each category of regulatory license is $10, so if you want to be a retailer, wholesaler, rebuilder, and reconditioner, the regulatory license fee will be $40; if you want to be a retailer only, the cost is $10.

The second license you'll need is your business license, or privilege license. The fees associated with this license are based on your city's population. This license is valid for one year, from October 1 to September 30; you'll pay the application fee again every year to renew it.

You may apply for your auto dealer's privilege license at your local county probate office. Before a license will be issued, you must:

1. Complete an application form.
2. Obtain a surety bond (available from your insurance agent) in the amount of $25,000 for a new dealer license or $10,000 for a used car license.
3. Purchase blanket liability insurance for all vehicles connected with the business. The current insurance certificate must be submitted with your license application and must include specific information. If the coverage is cancelled or not renewed before the expiration date, your dealer license will be revoked.
4. Obtain a sales tax number online or by mail in the same name as your business.
5. Obtain a permanent business location with a verifiable phone listing.
6. Take photographs of your business sign and location. You may use a digital camera, but the pictures must be printed on photographic paper, and not copier paper. Be sure to adhere to the photo and sign requirements.
7. Pay the appropriate fees, based on your city's population (see above).

Dealer Tags

Any dealer who holds a valid dealer's license may apply for dealers' tags at the dealership's county courthouse. For more information, call (334) 242-9000.

Tent Sale

If you plan to hold a special sale somewhere other than your business location, such as an auto show or convention, you should obtain a license for the event by calling the Department of Revenue at (334) 353-7827 at least 14 days before the sale and paying a fee of $25. The sale location must be in the same city or county where you are licensed. You may also need a separate dealer privilege license for the tent sale, and you should check with your local governments to determine whether additional local fees or licenses are required.