How to Get a Car Auction License

Published: Jan 2, 2023
car auction license
If you want to sell vehicles to the public, or to other dealers, at auction you’ll first need to secure a car auction license. State requirements vary, but in general, an auto auction license will allow you to sell vehicles either to another motor vehicle dealer or direct to the public.

If you want to get a car auction license, you’ll need to complete a car auction dealer license application, meet local state requirements and pay your license fee. To help you secure your dealer plates and take the next step on your career ladder, we’re taking an in-depth look at the application process and everything else you need to know.

1. The Car Auction License Requirements

Licensing requirements for car auction dealers differ from state to state, so it’s important to check with your local Department of Motor Vehicles (DMV) to learn about the exact conditions for securing a car auction license where you live.

Having said that, the rules in most states are fairly similar, and there are some standard requirements all car auction dealers will have to meet in order to secure their license.

Business and Tax Registration

To obtain a car auction license, you will first need to register your business. This is generally done at the office of the Secretary of State. This process will require you to determine a structure for your business.

You’ll probably also need to apply to your state’s Department of Revenue to obtain your sales & use tax registration. You’ll need this to pay sales tax on any vehicles you sell at auction.

Finally, you may need to obtain an Employer Identification Number (EIN) from the IRS.

Established Place of Business

Auto auction dealers and wholesale dealers generally do not require a lot or display space. Auctions are usually held at third locations, so you probably won’t need to have customers at your place of business.

If your state does require you to have a lot or display area, you’ll need to obtain zoning approval from your municipality and comply with spatial requirements for your lot. You’ll also need to provide a lease agreement or proof of ownership for the lot.

While you may not require a lot, you will need to have an office, known as your established place of business, where you keep your files and manage your company. This office will need to display a sign showing your business name and opening hours.

Criminal Background Check

As part of your car auction license application, you’ll probably be asked to pass a criminal background check. To complete the check, you’ll need to provide electronic fingerprints and possibly fill in a personal history form.

2. Complete the Car Auction License Application

Once you’ve met all of your state’s car auction license requirements, you can fill in your car auction license application form and submit it to the DMV, along with your license fee.

Car Auction License Application Form

Begin by downloading the relevant application form from your state DMV’s website. Some DMVs offer online applications, though many still accept application packets via mail.

Along with the completed application, you’ll need to attach documentation confirming you’ve met the above requirements. This may include:

  • Business entity registration documents
  • A Certificate of Authority or a Good Standing Certificate
  • Proof of compliance with location requirements
  • Photographs of the outside of your office, business sign, business hours, and photographs of your lot / display space (if needed)
  • Lease agreement or proof of ownership (if needed)
  • Criminal background check and/or personal history form

Licensing and Application Fees

In addition to the above required documents, you’ll need to attach a check made payable to the DMV to cover your licensing and/or application fee.

Fees vary widely between states and can be anywhere from $50 to $500 or more.

3. Provide a Surety Bond and Insurance

One of the final things you’ll need to do before submitting your application pack is to get an auto dealer bond.

The bond’s purpose is to guarantee that you comply with your state’s laws and regulations on the sale of vehicles by car auction dealers. The cost of your dealer surety bond will depend on your credit score and on the surety bond amount you’re required to post.

In addition, a garage liability policy may also be required by the DMV.

4. Submit and Receive Your Car Auction License

Once you’ve assembled your documents and met local and state requirements, you’ll need to send your completed application to your state DMV. You should get a response from the DMV a few weeks after submitting your business license application pack.

In some cases, your office premises and lot (if you have one) may need to pass an inspection before your application is reviewed and your license issued.

After the final approval of your application, your license will be issued and sent to you by mail. You can then get your business up and running and start selling cars at auction.

5. Car Auction License Expiration and Renewal

Most auto auction licenses are valid for one year. They may expire a year after they were issued or expire on a certain date.

In order to renew your license, you’ll need to submit a renewal application and renew your surety bond.

Want to know more about getting a car auction bond in your state? Get in touch with us at 877.514.5146

Types of Car Auction Licenses

There are two main license types you can apply for: a wholesale dealer license and a retail car dealer license. While both allow you to sell motor vehicles, there are some key differences between these two options, so it’s essential you apply for the dealer license that’s right for you.

Wholesale Dealer License

A wholesale dealer license allows you to sell cars to other commercial automotive

businesses. Any business that has a wholesale vehicle dealer license can auction cars. This includes car dealers, wholesalers, rental car companies and even banks.

Retail Dealer License

As the name suggests, this type of license allows you to set up a car dealership to sell cars to the public. If you secure a retail car dealer license, you can own a dealership and sell vehicles straight to buyers. A retail auto dealer license can also include the option to sell at wholesale and private car auctions.

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Collette Vierling

Collette Vierling is currently a Licensed Agent and Senior Account Manager with Lance Surety. Since joining the company in 2011, she has helped thousands of small businesses meet their license and bond requirements. Collette has a wealth of knowledge regarding all types of license and permit bonds, with particular expertise in the automobile, transportation and financial sectors.

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