How to Obtain a Dealership License


A car dealership license can get you into private wholesale auctions. For most people, that's enough of a reason to pursue licensing. However, there are additional advantages. For instance, having a license gives you the right to sell an unlimited number of cars, allows you to exchange your own personal registration and insurance for dealer license plates, increases your ability to gain access to credit from banks and other funding sources, and provides a tax haven for most expenses related to your business including gas, auto repair and even client entertainment. It is also a necessary step in the process to become an auto broker. The following will detail the general steps you need to take in order to obtain your license.

  • Contact the dealership you are interested in and your state's dealership licensing department. Request information on the next certification seminar and request a copy of all necessary forms. See Resources for an example of California's licensing application. Attend the seminar and any other classes you may need to take before certification. Certifications are dealer and state specific. Most seminar completion certifications are valid for one year.

  • Get a background check. Contact the police department in your area. They will tell you what steps to take. This may not be a necessary step in all certification requirements so be sure to check with your dealer and state licensing agency.

  • Take a photograph of your official sales location. The photograph should show your part of the lot. Most dealers require a land line phone, a sign with minimum lettering requirements with the business name, and posted business hours. Some dealers may also require you to be closed on Sundays.

  • Contact the police department or your state's highway patrol for an inspection. An officer may need to sign off on dealership and state licensing forms. Most large cities have a police officer specifically assigned to perform these inspections.

  • Register with the secretary of state. Like any other business, you will need to register your business, as an LLC (limited liability corporation) or corporation, with the state. If you are doing business in a name other than your own, you will also need to file a "fictitious name application" with the secretary of state.

  • Obtain insurance. Ask your dealership about minimum amounts needed for a surety bond and letter of credit. Most dealers maintain a minimum of $20,000 to $25,000 for each. In most cases, an original copy of the bond is required for certification. You will also need to request a certificate of liability proving garage liability insurance. See Resources for additional information regarding surety bonds and garage liability insurance.

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