If you’re interested in becoming a car dealer, you may have many questions about the process. We’ve put together this article to help answer your concerns.
First, you’ll need to apply for a license in your state. So, where can I obtain a car dealer license near me? Moreover, you’ll also need to post a surety bond as proof of your financial responsibility.
What is a surety bond?
Small company owners might be familiar with the term “surety bond.” These bonds are a way to guarantee that your customers will receive the services they pay for. They are similar to certain small business insurance coverages and make it easier for your clients to trust you with their money.
The principal, an obligee, and a surety business are all parties to a three-party contract known as a surety bond. The bond guarantees that the principal will follow specific rules and regulations set forth by the obligee.
If a principal violates the bond terms, they will face a claim against their bond. It can lead to financial loss for the obligee, but the surety will also be liable for a portion of this loss. It is one of the many reasons a surety bond is essential for businesses and individuals.
How do I get a dealer’s license?
The process of getting a dealer’s license can be overwhelming and time-consuming. However, it’s well worth the effort if you want to sell cars for a profit.
To become a licensed dealership, you must complete an application, obtain a sales tax ID number, buy insurance, and secure a surety bond. The surety bond protects the state from fraudulent business practices and helps make your dealership safe for the public.
Once you have complied with the state’s requirements, your business will be certified by an Automotive Facilities Inspector. Then, if needed, you’ll receive a Certificate of Registration, MV-50s, and dealer plate letters. Your dealer’s license is valid for two years and can be renewed for subsequent two-year terms assuming all compliance requirements are maintained.
What are the requirements to get a dealer’s license?
Whether you want to run an auto dealership or sell cars as a hobby, a car dealer license is required. The requirements vary from state to state.
The first step in getting a car dealer’s license is to submit an application, pay the necessary fees and pass an inspection by the state. After that, your business will be certified, and you’ll receive a registration certificate.
You must have a place of business where the primary part of your dealership’s activities are conducted, and you must keep your books and records there. Your office must be 180 square feet or larger. It should include a desk, three chairs, and a filing cabinet or similar furnishings to provide an environment conducive to your business activities.
It would be best to have a separate and defined area of the premises exclusively used to sell motor vehicles. It should not share any common area with another dealer, auctioneer, dismantler, manufacturer, or any other business that does not directly relate to motor vehicle commerce.
How do I renew my dealer’s license?
As with any business license, a dealer’s car dealer license needs to be renewed regularly.
The process of renewing a dealer’s license is relatively simple. The state will mail you a packet of forms and documents you must complete and submit to the department.
A renewal packet will contain all the necessary information to update your address, FEID number, and other information about your dealership. You’ll need to provide proof of this information for verification purposes.
You must contact the Business Licensing and Compliance section and notify any modifications to your dealer’s license as soon as possible.