How do I Become a Car Dealer?

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  • Written By: N. Madison
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 November 2019
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If you want to buy, sell, or trade cars for profit, you'll need to become a car dealer. The first step in this process is learning the laws regarding dealer licensing in you area. You can contact your state's Department of Motor Vehicles (DMV) for information. If you live in a place that does not have a DMV, look for a similar organization. The authority that handles business licensing in your area may be a good source of information as well.

Depending on the laws of your particular area, you may have to pass a background check to become a car dealer. You may also have to meet certain requirements involving your credit score. In some places, you may even have to participate in a training program to become a car dealer. Additionally, some locations have laws that require car dealers to pay surety bonds, which can be an expensive part of becoming a car dealer; this type of bond protects consumers who buy from you. In a case of fraudulent or otherwise illegal business practices, it gives them a way of getting money back, even if you refuse to provide a refund.


In most places, you'll also need to purchase liability insurance for your business and for the cars you plan to sell. This is an important step in becoming a car dealer, as it provides a measure of protection for your business. If someone slips and falls on your lot, liability insurance should cover you if the injured party decides to sue you. Likewise, liability insurance on the cars protects you in case an accident occurs before you sell and transfer ownership of the involved car.

As you work to become a car dealer, you'll have to consider where you'll sell your cars. This may mean purchasing or renting a lot as well as a building or office of some type. Most places have regulations regarding the size of the lot you can use as well as how many cars you can have on a lot, based on its size. You'll have to meet zoning requirements, which may require some extra effort if you are hoping to run your business in a residential area. You may also have to meet specific requirements for the type, size, and placement of signs at your business location.

Many places charge fees for becoming a car dealer. In some places, these fees can be hefty, amounting to a few hundred United States dollars (USD) or more. You should also consider costs related to the advertising you'll need to do once you become a car dealer. Having this money set aside and ready to go once you are licensed can give you a head start on building your business. Additionally, it's a good idea to think about hiring salespeople to help with your business; it may be hard to run your business, which may require long hours on site, without them.


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Post 2

State laws on dealer surety-bond requirements keep changing. Some of the changes up the amount of bond required in some states. Carol Tice

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