How to Become an Auto Dealer

Auto dealers can make money both on the initial sale of a vehicle and on the financing. If you're interested in becoming an auto dealer, you should know that there are a number of stops along the way. They include training, testing, licensing, meeting zoning requirements and passing muster with the DMV. As you travel this route toward your auto dealership, the following steps can help you avoid unwanted detours.

Instructions

1. Take the state-mandated auto dealer certification class. The requirements for this vary from state to state, and it can be done online or in a classroom setting. Per-hour education requirements have to be completed before anything else.

2. Once you have completed the course, you must take the auto dealer certification exam There is a fee for taking the exam. Once you have passed the exam, it's time to begin the application process for your dealership.

3. Choose a location, an office and a name for your dealership. Every auto dealership must have an office and a physical location for doing business. You will then choose the vehicle types you wish to sell, such as new cars or used cars. If you're buying a franchise to become an authorized dealer, contact the automaker to discuss its requirements in addition to your local government's requirements.

4. Once you have selected the location and types of vehicles you wish to sell, it's time to obtain a zoning verification letter showing that the location is approved by the city as a place of business for auto dealers. This letter is a requirement for getting a surety bond.

5. Get your surety bond. The surety bond is an amount no less than $10,000 that is a promise by the dealer to honor all applicable fees that are associated with the dealership. The bond is secured by your personal credit history. Depending on your credit history, additional collateral might be required.

6. Obtain a business license from the state in which you are doing business. The required forms can be found on the DMV website for your area or on the state website.

7. Outfit your office with appropriate furniture, computers and telephone lines and have your applicable forms and licenses on display before the DMV gives you a final inspection. Get the initial vehicles you've purchased on the lot and make sure you have appropriate signage for your location. The DMV will require photos of these things before scheduling your inspection.

8. Once all of this has been done, set up the inspection with the DMV. The DMV inspection is the final step before being able to open for business. Once you have passed your inspection, you will receive your dealer number, temporary license, special plates and report-of-sale forms.