How to Become a Licensed Car Dealer

Licensed car dealers can sell new and used cars to customers or other car dealers.

Car dealer licensing requirements vary from state to state but typically include filling out an application, completing a car dealer education course and registering a business with the secretary of state's and county clerk's offices. Most states maintain car dealer license application information on their department of motor vehicles website. Types of car dealer licenses include new, used, wholesale and auto broker. Licensed car dealers work for dealership owners or may start their own dealerships.

Things You'll Need

• Car dealer application
• Car dealer education course certificate
• Business license
• Surety bond

Instructions

1. Visit your state's department of motor vehicles (DMV) website to download car dealer application forms. Forms may include new, used or wholesale car dealer applications; auto broker applications; motor vehicle or RV dealer applications; or occupational license forms. Complete and return the forms along with filing fees and other required documents, such as proof of identification or a commercial property lease agreement if you're opening a dealership.

2. Complete a car dealer education course according to state requirements. The DMV website should include a list of accepted car dealer education courses and instructors. Send a copy of your educational course completion certificate to the DMV.

3. Apply for a business license or fictitious business license, or register your business as a limited liability company or corporation with the secretary of state's office if you're starting a dealership. Visit your state's secretary of state website to download the appropriate business registration forms. To register your business, contact the county clerk's office that oversees the county in which you plan to operate a car dealership.

4. Purchase a surety bond from a licensed insurance provider. A surety bond helps keep business owners or those working for car dealers honest and may be used to pay any legal fees associated with a lawsuit against the dealership. The secretary of state or DMV website may provide a list of licensed insurance providers in your area.

5. Pass an inspection of the dealership location by a member of the DMV if you're opening a dealership. This inspection may include the main office, current vehicle inventory, showroom areas and a review of all paperwork, to ensure that you have turned in all required documentation.

Tips & Warnings

• Contact your state's department of revenue or comptroller's office to inquire about applying for a sales tax license. You may need to submit additional paperwork to accept sales tax from customers.

• Use of dealership property for anything other than the sale of cars is prohibited in most states. If, upon inspection of the property, it is discovered that the property is being used to sell other items, your car dealer license may be terminated.

References

• California Department of Motor Vehicles: Application Requirements

Resources

• U.S. Bureau of Labor Statistics: Automobile Dealers