The Complete Delaware Dealer License Guide
Are you considering to launch a dealership in Delaware? In order to start a car sales business in the state, you have to obtain a Delaware dealer license. It is necessary for anyone who wants to sell more than 5 vehicles per year.
The process includes completing a number of administrative steps. The licensing ensures you are suitable to conduct such professional services. One of the major requirements that you have to satisfy is to post an auto dealer bond.
You can find out further details about each step of the licensing process in the guide below.
1. Determine the right auto dealer license type
The Delaware Division of Motor Vehicles (DMV) is the state body that oversees the activities of dealers. It provides different Delaware car dealer license types that correspond to the kind of vehicles you want to sell:
- New Dealer – new vehicles
- Used Dealer – used vehicles
- Wholesale Dealer – wholesale
- Mobile Home Dealer – mobile homes
- Trailer Dealer – trailers
- Auction – auction sales
- Motorcycle/Moped Dealer – motorcycles and mopeds
- Re-possessor – transport and sales of repossessed vehicles
- Recycler/Salvage Dealer – salvaged or wrecked vehicles
2. Get to know the Delaware dealer license requirements
The process of obtaining a Delaware auto dealer license is rigorous. You need to provide proof that you satisfy the following requirements:
- Information about all owners, partners and managers
- Business entity documents
- Signature Authorization (Form MV26)
- Location criteria, including business sign and business location – display area, office with a desk and a filing cabinet, and telephone (not necessary for wholesale dealers who may operate from a private residence)
- Franchise agreement (for new vehicle dealers)
- Liability insurance for all dealer plates
- $25,000 surety bond
Further information about each requirement is available in the DMV’s Dealer Procedures Manual.
3. Prepare your paperwork
The starting point for your licensing process is the application form. You need to complete it fully and get all your supporting documents ready.
Besides fulfilling the requirements of the DMV described in the section above, you also have to obtain a list of documents from other authorities:
- Dealer or wholesale dealer business license from the Department of Finance, Division of Revenue
- Business name registration with the Prothonotary’s office in the relevant county if you’re going to be doing business under a DBA name
- Criminal background check from the State Bureau of Identification
- Zoning approval form from your city or county – if located in a city, contact your city hall; if located outside of town or city limits, contact your county: New Castle, Kent or Sussex)
- Entrance Permit from the Department of Transportation (if the place of business is located on a state-maintained road)
4. Obtain the required Delaware auto dealer bond
Among the main licensing requirements that you have to meet is to post a surety bond. It is a safety mechanism that protects the state and your customers, guaranteeing your legal compliance.
The Delaware auto dealer bond amount is set at $25,000. To get bonded, you have to cover a small fraction of it, which is known as your premium. It depends on your personal and business finances. You can expect rates between 0.75% and 5% if your application is strong. This means that the price you’d have to pay can be as low as $187 to $1,250.
5. Apply with your full document set
Once you have completed your application form duly and prepared all required documents, you can submit them online or by sending them to your nearest Division of Motor Vehicles facility.
The Delaware DMV doesn’t charge application and licensing fees. However, there are some additional fees which are the following:
- $100 dealer business license fee (Department of Revenue) +$75 for Delaware wholesale dealer license applicants
- $10 fee for each dealer plate
- $52.50 criminal background check
After you have filed all your documents and paid all fees, an inspector will visit your business location to ensure you meet all requirements. They will have to complete the Inspection Form (MV29A), after which you will be able to receive your license.
6. Renew your Delaware dealer license annually
The licensing period for Delaware dealers runs from January 1st to December 31st. Thus, you need to renew your license before the end of every year in order to continue your operations in the state. You can do so 90 days before the expiration day. The condition for renewal is that you must have sold at least 5 vehicles in the previous license year.
Do you need more information about obtaining your Delaware dealer license and bond? You can get in touch with us at 877.514.5146.