Auto Dealer License Cost will be one of the first questions you want answers to. This actual cost will vary from state to state. But it is my intention to give you a good estimate.   Getting  your Auto Dealer License will cost you more than money…it will cost you time  and considerable energy too.  But lets just deal with the money issue for right now. There are several key things that you have to have in place before you can even apply for your license.

Most states will require you to have a business license or certificate of some kind …you have to submit this along with your application.  This is generally a city issued business license that will cost you between $25 – $125. It is the city way of monitoring who is doing business in the state and creates a paper trail for accounting purposes.  When you go to your local county clerk or business registrar, they will tell you exactly what you need to do business as an auto dealer….

Next  we look at the  surety bond…the state you live in and your personal credit score  determines actual cost.  After rent, this is your next biggest auto dealer license cost. Simply put, surety bonds are guarantees that protect your customers. Should you break the rules, your clients can make claims against your bond which you’re responsible to pay. For example, if you sell a vehicle with invalid tags, a  clunker that doesn’t run or breaks down, a claim can be made. Your surety bond protects the public; in other words it protects your clients, not you. If you commit fraud or break any other rules while selling vehicles, your clients can file claims on your bond.  You can expect to pay between $800 -$2,000 annually for your bond (assuming you qualify for one…if your personal credit is good enough  ie. 700 credit score).

Not necessarily  required but definetly  recommended… is  additional business insurance.  You can put this insurance on your business entity in order to further protect you from any claims against you or your business.  This is why you should set up a corporate entity (inc, or LLC, etc) … to provide protection for your personal assets, a boost of credibility for your dealership and easier access to loans.  Expect to pay $300-$500 to set up your corporation and another $50-$150 month in business insurance.

DMV Auto Dealer Pre-Licensing Education Course – generally between 4-16 hours mandatory classroom training (some states allow online classroom). The Training course (taught by certified Auto Dealer professionals)  is necessary and  is especially valuable to anybody who has no experience in the auto industry.   Here is the basic course material covered:

• Local State Business and Civil Code, relating to Motor Vehicle Sales Finance
• Motor Vehicle Financing
• Truth In Lending
• Sales and Use Tax
• Use of Safety Equipment
• Advertising
• Odometers
• Vehicle Licensing and Registration Process
• Offsite Sales
• Unlawful Dealer Activities
• Air Pollution Control Requirements
• Regulations of the Bureau of Automotive Repair (BAR)
• Handling, Completion, and Disposition of Departmental Forms
• Basic Licensing Requirements of Dealers
• Use of Special Plates
• Federal Buyer’s Guide
• Stolen Vehicle Prevention
• DMV Enforcement Actions
• Vehicle History Disclosure Requirements
• Warranties

Expect to pay  between $60-$150 for this course. Most states require you to have annual education course updates  and credits in order to keep your license in good standing.

Place of Business:

You will have to show proof of place of business, your baseline Auto Dealer License Cost. This cost differs greatly from state to state. Generally you have to have a building, land lot, telephone lines and building signage that can be visibly see from the street. This all has to be in the relevant city zone. Some cities allow you to operate from a commercial office or a even from home.   If you choose to lease a place of business, small offices (or warehouse locations) that qualify typically start at $300-$400 per month.  Other states (cities and municipalities) require you to be on a commercial strip in the relevant zone…and your building costs can be as high as $1,000 a month or more. You generally have to show proof of minimum of 1-3 year lease.

So as you can see, the cost of an Auto Dealer License is $385-$750 in one time up-front costs…. and $6,200 -15,200 in approximate annual cost. And this is not even counting your start up inventory.

Find out about our Sponsored Dealer program…where you can satisfy all of DMV requirement without having a building or land lot yourself (and relieve you of some Auto Dealer License Cost)… We also get you into all of the ‘Dealer Only‘ Auto Auctions nationwide (Adesa, Manheim, Iaai).