Five Steps to Securing a Car Dealer License

In order to legally sell motor vehicles in the state you plan on doing business, your company is required to hold a valid auto dealer license. If you are unsure if your company is considered an auto dealer, each state considers business engagement differently, so it is best to check with the Department of Motor Vehicles (DMV), Depart of Licensing (DOL), or other government entities in charge. You will be expected to get an auto dealer license if your operation does not meet one of your state’s exemptions. Below I will outline five easy steps a company can follow to efficiently get their auto dealer license.

Step #1: Contact Your Local Governing Entity

Each state has their own conditions that auto dealers must meet to legally become licensed. Your local governing entity, such as the DMV in some states, is typically a great resource to contact with questions about qualifying for a dealer license. These government agencies can explain the specific license your business will need and the subsequent forms that must be filled out. Here is another helpful resource to better understand the specific requirements for each state: https://jetsurety.com/states/.

Step #2: Meet Your State’s Requirements

After contacting your local governing entity, it is important to meet the basic guidelines that most states require. These generally include: passing a background check, registering your business, presenting proof of insurance, and following local zoning laws. Other specific requirements in your state will depend on your dealership type, which is based on factors like how many vehicles you sell and if they are used or new.

Step #3: Complete Your Car Dealer License Application

To begin the application process for your dealer license, it is important that you receive the appropriate forms from your state’s controlling government entity. Check to make sure that all necessary fields are filled out, because your application will be delayed if it is not turned in correctly. Often times, other items need to be submitted alongside the application, such as a surety bond. There are usually instructions at the top of the form to guide you through the different sections, or a checklist to make sure all appropriate paperwork is being completed.

Step #4: Secure Your Auto Dealer Bond

Almost every state requires new and used car dealers, along with other dealer types, to purchase a motor vehicle dealer bond. These are called surety bonds, which are different than general liability insurance because they are in place to protect the customer versus the insured. If, for example, a customer suspects the odometer on the car they were sold has been tampered with, they can make a claim against the dealer’s bond. The cost to secure the surety bond will be dependent on your personal credit, as well as specific business information. Get a quick and easy quote at https://app.jetsurety.com/quote/.

Step #5: Submit Car Dealer Application and Paperwork

The last step to securing your auto dealer license is turning in all required paperwork. This will include an auto dealer license application, proof of insurance, an auto dealer bond, and a few other forms.

Now, you can wait for approval knowing you did everything correctly!

Hi, I am part of the marketing team at Jet Insurance Services, Inc and a writer for their blog: https://blog.jetsurety.com. We are very knowledgeable about the surety bond industry and are excited to share what we know.