Buying and selling used cars requires a sales license in all 50 states. The license is referred to as a dealer's license or used car license. Obtaining a license can be a costly and difficult process depending on the state. Many states require the person requesting the license to have good credit, a clear criminal history and a business location that meets strict requirements. Having a dealer's license, however, allows you to purchase cars from a variety of locations such as auctions or wholesale from other dealers, and resell them for a profit.
- Skill level:
- Moderately Challenging
Visit dmv.org. Locate your state and click on the link to view the requirements for your state. You will find the costs, legal requirements and forms necessary to obtain your used car license.
Review the process carefully for your state. Once you are satisfied that you meet all the requirements, print the forms and complete them. Return the forms to the state entity that governs the used car license process. In some states, this is the Department of Motor Vehicles, the Department of Public Safety or the agency governing motor vehicles. The type of agency your state uses will be shown on the website listed in Step 1. In some states, you will need to pay fees in advance and other states will not charge you until you are approved for a sales license.
Complete all steps necessary to obtain the license per your specific state requirements. You may need to have a credit check performed, as well as a criminal background check. You need to purchase a surety bond which you can get from your local insurance company. If your state requires you to have a business location, follow all the requirements for signage, hours of operation and any other rules.
Stay in close contact with the state office who issues the used car sales license. The office staff should inform you of the length of time to process requests and advise you of the exact steps to follow. When approved, follow the appropriate rules for your state to collect and report sales tax. Use the sales and odometer reading forms as requested by your specific state.
Tips and warnings
- If your credit report has negative entries, you may be required to explain the reason for the negative entries.
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