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Car Dealer License Requirements

Date posted: 07/02/2012

by Melissa Crumish on
in Buying & Selling

1226 Car Dealer License RequirementsThere are some who claim obtaining a travel visa to North Korea is easier than obtaining a car dealers license. Yes, the dealer license application process is long, but it’s necessary. It helps state officials sift out potentially shady owners with the ultimate intent of protecting consumers.

In other words, it’s a state’s way of saying, “Only serious applicants need apply.”

Serious, indeed.

General Requirements for Obtaining an Auto Dealer License

Your state, usually through the Department of Motor Vehicles (DMV), determines the requirements to obtain an auto dealers license. While exact requirements do vary by state, the following list will give you a heads-up on what to expect.

  • Own or lease a commercial business site that meets local codes.
  • There must be an enclosed building on the premises (you can’t use your home). Some states require the building to meet minimum square footage requirements.
  • The site must have a permanent business sign, visible from the road.
  • The building must have a working phone system with a listed number.
  • The business must be open a certain number of hours per week., and the hours must be clearly posted on the front door.
  • Books, records, and files must be maintained on the site.
  • You must carry a bond. The exact amount varies by state, but on average expect around $30,000.
  • Provide detailed information about your business finances. If you don’t own the business site, you’ll also need to include the lease agreement. This, more than any other requirement, is the biggest reason for rejected applications.
  • If applying for a new vehicle dealers license, provide the name and address of each car manufacturer (i.e. Ford, Honda, Toyota…) you’ll be representing.
  • Each auto dealer owner and partner must provide fingerprints and pass a background check.
  • Provide the business name. It cannot be the same name of an existing business.
  • Furnish, if applicable, proof of garage liability insurance. In most cases, this only applies to dealerships selling new cars.
  • Provide proof of attending a car dealer education seminar.
  • Provide a sales tax number.
  • Complete an auto dealer license application packet.
  • Pay all required car dealer license fees.

Remember, requirements vary for each state. To learn your state’s exact car dealer license application requirements, check out state-specific pages in our Dealers & Auto Industry and the Dealer Handbook for more.

After submitting the application, processing and review generally takes 30 days. Given the length of the application process, be sure you meet all of your state’s requirements before applying.

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