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How to Obtain a Business License as an Auto Dealer

By: Nadia Ibanez August 6, 2012

Some people have discovered a love for selling cars and have found thrills in vending the right car for every customer. Auto dealers and salespeople have a certain finesse for selling new and used cars that not everyone can relate to.

If you are thinking about entering the auto dealer workforce, whether as a new or used car dealer or car salesperson, you must know that it requires a business license.

Each state mandates various types of dealer and salesperson licenses, and the required dealer licensing forms for each, needed to sell a vehicle. Here are some of the steps you may run into when trying to obtain a business license as an auto dealer.

Initial Steps in the Business License Process

Unless you are selling your own used car to a third party, your state will likely require you to fill out an application to sell a new or used car to the ordinary consumer as an auto dealer. Some states require a dealer training program in order to do business, which is a great way to see the internal operations of the industry.

Some states delve deeper in the application process and require new car dealer applicants to undergo a background check and fingerprinting. The state wants to make sure that you don't have a criminal history that would poke its head while conducting business with the public.

The state will also want to study your business as an entity and may require additional documents such as:

  • Proof of insurance.
  • Your business certificate.
  • A surety bond.
  • Franchise agreements.
  • Lease or rental agreements.
  • Photos of your workspace.

Some states even require you show proof of having a business sign and an operable telephone on location.

Additionally, the office that handles applications and licenses for dealers and salespeople vary state to state, so make sure to fellow colleagues or DMV authorities about where to send these forms for clearance.

What to Know about the Business License Application Process

States like Texas and California offer a car dealer manual and guide for those that want to understand the nitty gritty about everything that professionally selling a vehicle encompasses. While all of the initial licensing applications vary by name in each state, it’s the one step of the process that you cannot avoid. Do some research online or by phone and find out the exact name of the form.

Once the application is complete, there will be a license fee that must be sent in along with the documents. Make sure you are well aware of the acceptable forms of payment so that your application isn’t rejected or pushed back. The average waiting time varies state by state, so if you’re in a hurry to start selling, keep in mind that you'll have to wait several weeks or months while your application is processed.

Working at a car dealership can be exhilarating and there are many perks in this field of work. Once you decide that you want to you want to be part of the auto industry, make sure you master the business application process so that you’re not left in the dark.

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