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How To Get a Dealer’s License to Buy New Cars at Auction

By Mike Richards Updated: 05/22/2019 Posted: 10/16/2015

Did you know that you can actually buy brand new cars at auction? In most circumstances, these are only available to people who hold a dealer’s license.

Getting a dealer’s license, however, can be a complicated process, and you’d have to comply with many rules, regulations and requirements.

How to Get an Auction License of Dealer

The process of how to get auction license varies from state to state. It is therefore essential that you consult the relevant government department in your state. The Nevada DMV has provided a link where you can find the contact information of every state in the United States plus the District of Columbia.

While the following will only cover the very basics, here is what you can expect to need to do in each state:

  • Alabama – You will need to go through the probate office, fill out an application, get a $25,000 surety bond, get insurance and a sales tax number, offer a business location, and pay fees.
  • Alaska – You will need to provide a $50,000 surety bond, file an application with the DMV and pay a registration fee.
  • Arizona – You will need to pass a criminal record check, fill out an application and get a $100,000 surety bond.
  • Arkansas – You will need a $25,000 surety bond, a business site, a list of owners and proof of insurance.
  • California – You will need to submit to a background check, apply through the DMV, provide certificate of dealer education, get a business license, provide photos of the business, and pay fees.
  • Colorado – You will need to fill out an application, provide a statement of financial condition, provide details on place of business, and get your business set up properly.
  • Connecticut – You have to prove you have an area to store vehicles, a business license, a parts department, and a mechanic.
  • Delaware – You will need to fill out a license application, have your business site reviewed, and get dealer tags for cars.
  • Florida – You can fill out the application online and provide fees including $330 for the location and $54 for background checks per person involved.
  • Georgia – Complete an application, get a surety bond of $35,000, get insurance, and provide business information. Additionally, provide a pre-licensing seminar and get a background check.
  • Hawaii – You will need to apply for a dealer license, provide a self-inspection, provide pictures of your business site as well as details about it, offer a financial statement, and get a line of credit with an FDIC approved institution.
  • Idaho – You will need to name your dealership, obtain a performance bond, provide information on your business, and attend dealer training.
  • Illinois – You will need to go through a background check, complete tax requirements, pay licensing fees and fill out a dealer license application.
  • Indiana – You will need to complete an application, get a $25,000 surety bond, get zoning approval for your business, obtain tax information, and submit to criminal background checks.
  • Iowa – You will need to fill out an application and meet licensing requirements for the business.
  • Kansas – Apply for dealer license, get a $30,000 surety bond, provide you franchise agreement and get sales tax clearance.
  • Kentucky – You must establish a place of business, get insurance and surety bonds in order, and provide information on your physical location.
  • Louisiana – You will need to apply to be a major dealer with the motor vehicle commission.
  • Maine – You must show that you have a one-year lease with the place of business, get sales tax information, and prove liability insurance after applying for a dealer license.
  • Maryland – You must follow all the steps required to open a business, and complete a dealer application package.
  • Massachusetts – You must choose from three different classes of dealer licenses and fill out appropriate applications.
  • Michigan – You must submit to a background check, get a $10,000 surety bond, and have a franchise agreement.
  • Minnesota – You must fill out an application, complete a commercial location checklist, and provide zoning verification and compliance information.
  • Mississippi – You must pay licensing fees, provide franchise and financial information, get background checks on all employees, and have a motor vehicle bond of $25,000.
  • Missouri – You must submit all information for a motor vehicle dealer application to the Secretary of State.
  • Montana – You must provide all information about the business, get a $50,000 bond, and provide information on insurance.
  • Nebraska – You must provide contact information for the business, information on vehicles, and details on partners as well as get a $50,000 surety bond.
  • Nevada – You must complete the process for a general business license, provide detailed financial histories, prove insurance and obtain a vehicle licensing bond.
  • New Hampshire – You must fill out an application and provide it along with fees to the Department of Safety.
  • New Jersey – You must fill out applications and prove you have required insurance on the dealership.
  • New Mexico – You must establish a place of business, sign a business affidavit, and have your place of business inspected before applying for a dealer license.
  • New York – You must register your business, get a $10,000 surety bond, and provide proof of insurance and franchise.
  • North Carolina – You must provide information on your physical business, apply for a license, and complete licensing courses.
  • North Dakota – You must possess property that is at least 2,500 sq feet, have a heated office, provide business records, and submit motor vehicle bonds and licenses.
  • Ohio – You must provide a completed, notarized application and get a surety bond of $75,000.
  • Oklahoma – You must prove a franchise and complete a motor vehicle dealer license application.
  • Oregon – You must complete a three-year application, prove insurance coverage, and pay fees.
  • Pennsylvania – You must pick from numerous different types of dealer licenses and apply for one appropriately.
  • Rhode Island – You must follow the steps to set up your business and then apply for a one-year license.
  • South Carolina – You must fill out an application and obtain the proper surety bond as well as fill out incorporation papers.
  • South Dakota – You must choose the right type of license, fill out the application form, and obtain the appropriate surety bond.
  • Tennessee – You must have your facility approved, have a proper vehicle display area, and certify that you have insurance as well as business documents.
  • Texas – You must complete an application and pay proper fees. The application will be reviewed by a specialist.
  • Utah – You must fill out an application, submit to a background check, provide business photos, and go through license training.
  • Vermont – You must submit an application for review and approval.
  • Virginia – You must establish your business, finish a dealer course, and pass an exam.
  • Washington – You must obtain a business license, show proof of physical location, prove business hours, and show proof of exterior signage.
  • Washington DC – You must get a business license along with proper permits, get a Clean Hands Certification, and apply for dealer registration.
  • West Virginia – You must complete a provided application package and obtain a $25,000 surety bond.
  • Wisconsin – You must complete a business license and provide all documentation on this.
  • Wyoming – You must choose from several different types of licenses and then complete the applications for that specific one.

Using Proxy Bidders

Of course, getting a dealer’s license would only make sense if you actually want to own a dealership. It costs a lot of money and it demands a lot of hard work.

Also, there are alternative ways to buy cars at auctions with auctioneers. You can buy used and salvage cars at many in-person and online auctions without needing a dealer license.

You can even get access to certain dealer-only online auctions by hiring a third-party bidding company. This is a company that uses dealer license to give you access to car auctions that are not usually accessible to the average consumer. They can bid on your behalf, according to the limit you can set beforehand. They can also help you arrange for transportation for your new car.

Explore our Vehicle Auctions, as well as finding more information about How These Auctions Work.