According to the state of Tennessee, when an individual sells more than 5 vehicles during a calendar year, he is considered in business and must be licensed by the state as a dealer. Tennessee Used Car Dealer License Requirements are quite specific in that you need a space large enough to hold 15 cars for display plus 3 car parking spaces for your customer.
you need space to hold 18 cars
I always recommend that you acquire your facility first and try to get something already pre-approved so that you reduce your chances of any mishaps. Once you have secured your location, then you can complete your dealer application. An Area Field Investigator will conduct a site visit of your facility to be sure you are in compliance.
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Breakdown of Tennessee Dealer License Requirements
Facility Requirements
You will need an approved building facility that is a stand-alone structure (physically separate from all other buildings). You will need to outfit your office with office furniture and a working business telephone. A cell or mobile phone is not acceptable as primary line.
Tennessee Used Car Dealer License Requirements are pretty straight forward but the signage varies slightly from city to city, so check on that. No matter where you open, be assured that you will have to meet the sign requirements of a minimum letter height (varies slightly per ordinance), permanently installed, and visible from the road. The sign should state the full name of the dealership, minimum 8 inches in height, along with its designation as a business entity – whether corporation, LLC, LP or else. Beyond having display space for your cars, you will need enough space for 3 parking spots dedicated to your customers (18 parking spots minimum). Besides the parking spaces, your facility has to be a minimum of 288 square feet total, as well as offering functioning restrooms for your customer. Tennessee Used Car Dealer License Requirements for facility keep a lot of people out of the game.
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Next, you’ll need to send proof of the following requirements along with your application:
Surety Bond
Like all other states, Tennessee Used Car Dealer License Requirements include a Tennessee Auto Dealer Bond. As a motor vehicle dealer, an individual or business has a great burden of proving trustworthiness. The client (the state) needs to know that the dealer will provide fair prices and services, upstanding information, and ethical treatment of each of their customers. The Tennessee motor vehicle bond “enables” or enforces this (depending on your view point). A vehicle dealer bond is a type of surety bond that helps to show that the auto dealer can be trusted.
In Tennessee, without an auto dealer bond you cannot open a dealership and is the prerequisite for your Tennessee Used Car Dealer License Requirements checklist. This is because auto dealer bonds serve to guarantee that your business complies with state rules and statutes and that your salespeople conduct business in an honest manner.
If a car dealer violates state rules and regulations a claim can be filed against their Tennessee auto dealer bond. The surety company then steps in to compensate the claimant up to the full $50,000 amount of the bond, depending on the severity of the claim. It costs much less to get your bond, though. Typically, only a small percentage of the total amount of the bond is paid, and depending on your credit it will be somewhere between 1%-3%, at standard market rates.
Here are other Documents you will need:
- Provide a certificate of liability insurance with a minimum of $300,000 per occurrence.
- Business tax license
- Photos of the sign, lots, facilities, working hours and days, as well as of the facility as a whole, preferably in digital format.
- Sales tax identification number
- Personal and/or financial check and disclosure
- Financial statement prepared by a CPA
- Facility Zoning compliance
- Submit a service agreement with an operation repair garage if your facility does not have such a garage.
- Surety bond or letter of credit (original)
- If applicable, you must also send a copy of the:
- Stockholders update
- City tax license
- Signed service agreement
- Corporate charter
- Warranty rate form
- Provide a copy of your Sales & Use Tax Certificate.
- Submit a salesperson application and Eligibility Verification Form for every salesperson
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Below are the fees for each type of license. Each license is valid for two years, and renewal fees are the same as those for new licenses.
- New vehicle dealer: $400, per line make
- Used vehicle dealer: $400
- Salesperson license: $35.
- Change of employer endorsement: $35
- Motor vehicle show permit: $200
- RV dealer: $400
- Manufacturer, distributor, factory branch, or distributor branch: $1,600
- Factory representative of distributor representative: $400
- Auto dismantler and recycler: $400
- Automobile auction: $800
- All duplicate licenses: $25
Checks and money orders should be made payable to the Tennessee Motor Vehicle Commission and should be sent along with your application to:
Department of Commerce and Insurance
500 James Robertson Pkwy.
Nashville, TN 37243
Fees paid in cash can only be made in person.
For more information, or to schedule an appointment with a Field Investigator, call the Tennessee Motor Vehicle Commission at (615) 741-2711 or write to them at:
Tennessee Motor Vehicle Commission
500 James Robertson Pkwy.
Nashville, TN 37243
Once you have submitted your application along with all of the additional documents and items described above, an inspection will be scheduled for your dealership. After the inspection is conducted, and if no problems are established, a final review of your application will be performed. If approved, your Tennessee dealer license will be issued and you will receive your license no later than 14 business days after the approval of your application.
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