How to Get an Auto and Boat Dealers License

Getting an auto and boat dealer's license is a lengthy process that requires significant investment. In an effort to combat dealerships regularly opening and closing, most state departments of motor vehicles require a large amount of paperwork and training to be completed before a license is issued. Some common requirements when applying for an auto and boat dealer license include surety bond, a properly zoned place of business, sales tax license and application for license. Getting an auto and boat dealership license is similar, but you may need a larger place of business to sell boats.

Things You'll Need

• Surety bond
• Zoning paperwork
• Fleet insurance
• Application for dealer license

Instructions

1. Complete the license application. Determine if there are any special requirements or fees required in your state before completing the application. This application can cost a significant amount to file. You will not be reimbursed if the application is declined. Auto and boat licenses are separate license classifications, but the application for both types of license is similar.

2. Purchase surety bond. A surety bond protects your suppliers in the event your business liquidates or is unable to meet its obligations. When your creditors bill the dealership and it is unable to meet its obligations, the surety bond covers payment. States normally require a surety bond policy in the amount of $10,000 or more. The cost of this policy varies based on your personal credit history as well as the credit history of the business.

3. Complete zoning paperwork. Proof of proper zoning is required before a dealership license may be accepted. Depending on the jurisdiction, other municipal requirements could be necessary, and there may be requirements that govern the minimum size of the parking lot, display area and showroom.

4. Secure a franchise agreement. Before a franchised new auto or boat dealership receives a license, proof of the new vehicle franchise must be provided. Be sure the contract or statement from the manufacturer includes the dealership name and address as listed on the dealer license application form.

5. Acquire proof of fleet insurance, which covers all vehicles in a dealership's inventory and must be furnished before a dealer license is issued. Operating a dealership involves lots of liability concerns, and having clients completing test drives means an accident is always possible.

6. Furnish articles of incorporation. If your dealership is set up as a corporation, articles of incorporation and a list of all officers and their personal information must be furnished to the department of motor vehicles. In some states, all applicants and officers of a dealership must submit to fingerprinting and background checks.

Tips & Warnings

• The dealer license application process is lengthy one. You must secure a place of business, zoning approval and surety bond before completing the application. Be sure your contracts allow you out of these agreements in case your application is denied.

• Getting a dealership license does not guarantee success. Hire a proficient sales staff and keep expenses manageable.

References

• Michigan Department of State: Dealer Manual
• Ohio BMV: Used Motor Vehicle Dealer
• Maryland DNR: Boat Dealer Instructions