Do I Need a License or Certification to Open a Used Car Dealership? A Complete Guide

If you’re thinking about starting a used car dealership, one of the first questions you might ask is: Do I need a license or certification? The short answer is yes — every state in the U.S. requires dealers to obtain a used car dealer license before buying or selling vehicles. Understanding the process, fees, and additional certifications is crucial to launching your dealership legally and efficiently.

This guide explains the licensing requirements, necessary certifications, and key considerations — including insurance — to help you start your dealership the right way.

Understanding Used Car Dealer Licensing

A dealer license allows you to legally buy, sell, and transport vehicles. Requirements vary by state, but most include:

• Dealer license application

• Surety bond

• Dealer plates

• Background check and fingerprinting

• Zoning or lot requirements

Licensing ensures that your business complies with state regulations and protects both you and your customers. To see your state-specific rules, visit your state’s official DMV dealer licensing page.

Additional Certifications You May Need

Some states or municipalities may require additional certifications or permits, such as:

• Sales tax permit – to legally collect and remit sales tax

• Business license – general business operation permission

• Dealer education courses – some states require completion of a dealer training program

Costs Associated with Licensing and Certification

Typical fees vary depending on location and the type of license:

Item	Estimated Cost
Dealer license application	$100–$1,000
Surety bond	$10,000–$100,000 (premium 1–10%)
Background checks / fingerprinting	$50–$200
Dealer plates	$20–$150 each
Additional certifications or courses	$50–$500

Proper budgeting for these costs ensures you can open your dealership without delays.

How Licensing Affects Insurance

Most insurance providers require proof of a dealer license before issuing coverage. Insurance protects your dealership from liability and inventory losses, which are critical for financial stability. Common insurance types for used car dealerships include:

• Garage Liability Insurance

• Garagekeepers Coverage

• Dealers Open Lot (DOL) Coverage 

• Property Insurance –

• Workers’ Compensation 

Wexford Insurance specializes in providing dealership insurance nationwide, helping you get the right coverage after obtaining your license.

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Tips for a Smooth Licensing Process

• Start the application early to avoid delays

• Ensure your lot meets state zoning and signage requirements

• Complete all required training or certification programs

• Keep detailed records to support bond and insurance applications

Final Thoughts

Yes, you absolutely need a license to open a used car dealership — and sometimes additional certifications depending on your location. Understanding the requirements ahead of time will save you time, money, and legal headaches. Once you secure your license, protecting your investment with proper insurance is crucial.

Wexford Insurance makes it easy for used car dealership owners to get customized coverage nationwide. 

Contact us today.

FAQs

1. How much does it cost to start a used car dealership?

2. How do I create a business plan for a used car dealership?

3. Is owning a used car dealership profitable?