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How do you get a used car dealer's license?


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Answered 2010-12-16 17:28:21
Used Car Dealer's Licenses

This will depend on your state.

For example, to become a licensed car dealer the State of California Department of Motor Vehicles requires a dealer applicant to take a six hour preparation class to become a licensed car dealer. There are 2 main types of dealers, retail or wholesale. Retail Dealers have more restrictions as liability which required more dealer insurance as well as a larger dealer bond, but retail dealer are the only dealers allowed to sell to the public. Wholesale dealers may only sell to other dealers.

The applicant must take the class and pass a 40 question test, then submit an application and a bond, then submit photos and pass an on-site inspection. Upon review the DMV inspector will review the dealer's application and then approve the tempory license. Often the largest struggle for those attempting to start a retail dealership is the zoning for the city or county to allow a dealership at the chosen location. Make sure that the location you choose is zoned properly and/or will be an acceptable location for a retail dealership. Rarely do wholesale dealerships struggle getting proper zoning permission from the government.

Once a would be dealer passes the test they must prepare for DMV approval from the inspector. To prepare the following tasks must be done. The applicant must produce 11 photos 1)building 2)outside sign 3)display area 4)office 5)business license 6)resale permit 7)telephone 8)inside signs 9)locked cabinet 10)checkbook 11)dmv dealer book

Then the applicant must submit: zoning approval letter, OL902 certificate of class completion, TSM888 business license resale permit ficticious name statement telephone listing livescan fingerprint card personal history questionaire completed dmv dealer application bond in the name of the owner / dealership.

Temporary license can be granted within 30 days permanent license can be granted within 120 days.

Here is more input and advice:

  • You may need to call your state tax office.
  • In Tennessee a person wishing to obtain a "Motor Vehicle Dealer's License" must apply for one through the State Department of Commerce and Insurance, Motor Vehicle Division. They have a list of requirements that can be printed from their website. Requirements include: having a building with office furniture and a business phone, a display area large enough for 15 vehicles, a sign, liability insurance, a garage facility or Service Agreement with a local repair garage, and a surety bond or letter of credit for $25,000. The Dealer License Fee for used cars is $200.
  • I am in the process of opening a used car dealership in California. You go to the DMV and get all the required forms. Go to the county office to apply for a business license and a fictious name permit. Then contact the Franchised Tax Board to get your resale #. Secure a $50,000 used car bond (each state is different). Secure your location because you have to show proof of lease to the DMV.
  • In California, you can't have two different dealerships with the same address if your thinking about sharing a place with another dealer. You can't share,a business address with any other type of business period. The front door of your office must be facing outside.
  • As far as I know, most states require a sales office and have a required size. Must be inspected by the DMV before a license is issued.. NC is now requiring a DMV training class that must be done before they will even accept an application.

Indiana wholesale dealers can get licensed by first renting an office in a complex already approved for this purpose by the Indiana Secretary of State. You do not have to be an Indiana resident to qualify for this license. In addition to the office rental you will be required to have a liability insurance policy for the business and a $25,000 Bond. There is no class but you will attend a one hour meeting with a state inspector. Occasionally the inspectors require an audit of your documents and will meet at your rented office. To find one of these facilities simply search for Indiana wholesale dealers and a number of brick and mortar properties come up. Careful though, there are scammers. Once licensed as Indiana wholesale dealers the licensees can register to buy and sell cars at auction in all 50 states and in other countries worldwide. The four license plates issued to Indiana wholesale dealers with this license are legal in all 50 states as well.

These Indiana licenses will only allow you to sell to other dealers and wholesalers ONLY. You cannot sell retail to the consumer from your home or on the Internet. Investigate any "licensing for a fee" with the dealer licensing board in YOUR state.

These Indiana companies don't really make that very clear. You could get in a lot of legal hot water by not knowing the laws in YOUR state for buying and selling cars in YOUR state where you are making transactions. The State of Indiana could also get involved if you violate the guidelines of your Indiana license. ALL state statutes (laws) level hefty fines and in some cases jail time for violations.

As an example; Wal-Mart may be have its corporation licensed in Delaware (most companies do) but it MUST follow the laws in all the states where it ACTUALLY does its business transactions. If it doesn't, any state where it does business will take action.

As a dealer doing transactions in a state other than the one you're licensed, you MUST do the same; i.e. follow the laws and licensing statutes of the state where the transaction actually takes place... the location of the product (car) being sold. Selling on the Internet does not absolve you from licensing in the state your doing transactions.

One of the Indiana companies has a "retail" package. You cannot use a retail license in Indiana to make retail transactions in your state if the vehicle is not located in Indiana. The Internet is not a place, its a form of advertising just as classified ads. Verify this with your state licensing board. Protect yourself.

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