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Car Dealer License: What the Cost Is and How to Apply

  • Driver's License
  • Nova Kainen
  • 4 minutes

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Buying and selling cars legally is made possible in your state by having a dealer’s license. To legally buy or sell vehicles, one must hold the appropriate license. There are a variety of prerequisites to being a certified auto dealer that varies from one state to the other. Read this blog to know how much a car dealer license costs and the requirements to get one.¬†

What steps should you take to apply for an auto dealer license?

The steps to take are: 

  • Get in touch with the department in your state, such as the Department of Motor Vehicles (DMV),¬†that issues licenses to automobile dealers.¬†
  • Obtain a state application form and fill it out completely.¬†Applicant should have a valid business license and auto dealer bond.¬†
  • Complete the payment and submit the application after filling out the form.¬†¬†

Based on your state, the process involved will vary as the auto dealer license requirements vary with state. 

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What is an auto dealer bond?

Auto dealer bonds are a form of insurance that dealerships require to open a business. This auto dealer bond guarantees consumers that they will be compensated for any losses they incur due to the dealer’s dishonest or unethical business practices. The auto dealer bond guarantees that any consumer harmed by the dealership will be compensated for their losses.¬†

Your customers have the right to claim against your bond if you commit fraud or otherwise violate the regulations governing the sale of motor vehicles. You should have a good credit score of at least 700 to qualify for a bond. 

More: West Virginia Driver’s License Renewal: How to Do It!

Auto dealer bond requirements

For consumer protection and as evidence of the dealership’s financial stability, many states mandate that dealerships operating under their licenses be bonded. ¬†

  • Surety bonds typically range from $5,000 to $100,000. But this number varies by state and the value of the traded automobiles. ¬†
  • It is the applicant’s responsibility¬†to confirm the bond amount with the appropriate licensing agency.¬†¬†
  • To qualify for an auto dealer bond, applicants must show proof of liability insurance and proof of ownership of the lot where the business will be located. ¬†
  • Many states need a copy of the deed or lease agreement for the lot as proof of ownership. ¬†
  • Depending on the regulations, applicants should submit pictures of their physical location and any signage. ¬†
  • To obtain a license to sell automobiles in some places, one must finish a dealer education program approved by the state government.¬†

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What is the auto dealer license cost?

Most states will charge an application fee that ranges between $180 to $705. Each license plate a dealership requires for the costs of its vehicles anywhere from $55 to $105, depending on the state. After each term ends, you must pay a renewal fee to extend the license. Depending on your licensing terms, this may happen annually or every two years. 

Bottom line

Get a car dealer license if you intend to sell, purchase, or display motor cars for sale, also known as an auto or vehicle dealer license. Ensure you do not break the rules or commit fraudulent acts while selling cars. You will have to compensate the loss in case of any such acts. 

how much for a car dealer license

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