How to Get an Iowa Dealer License

Published: Sep 21, 2016
how to get an iowa dealer license


Starting an Iowa dealership is a solid business opportunity, but it entails meeting a number of administrative requirements to launch your legal operations. First and foremost, you need to obtain an Iowa dealer license to be in legal compliance.

Any person who sells more than five vehicles in a 12-month period needs to obtain such a license. The licensing process means you have fulfil all relevant requirements, including posting an Iowa motor vehicle dealer bond. In this way, the Iowa Department of Transportation enforces the safety of vehicle buyers across the state.

Let’s review the basic steps in getting your dealer license and bond in Iowa.

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The different license options

Before you set on to complete your licensing application, you need to decide what your business focus will be. Depending on the type of activity you would like to engage in, you are likely to need a different Iowa dealer license.

The main license types include:

  • New motor vehicle dealer license
  • Used motor vehicle dealer license
  • Motor vehicle leasing license – for leasing vehicles for longer than 60 days
  • Vehicle recycler license – for salvaging, rebuilding and selling used vehicle parts
  • Travel trailer dealer license

All the license types are active for up to two years. They expire at the end of every even-numbered year. This means that if you get a license in the middle of an even-numbered year, you will have to renew it by December 31st of the same year. However, if you get licensed in the beginning of an odd-numbered year, you will be able to use that license for almost two years.

Iowa dealer license requirements

The Iowa dealer license requirements

Besides completing an application form with the Iowa Department of Transportation, there are a number of licensing requirements that you need to prove you have fulfilled.

The most important criteria include:

  • Business location – landline number, repair facility, minimum size of 14×24 ft
  • New vehicle dealers – display location with minimum size 18×30 ft
  • Zoning approval certificate
  • On-site inspection by the Iowa DOT’s Office of Motor Vehicle Enforcement Investigation.
  • Franchise agreement for new vehicle dealers
  • 8-hour pre-licensing course for used vehicle dealers
  • Surety bond

You need to apply for obtaining dealer license plates separately as well.

Iowa motor vehicle dealer bond

As noted above, getting your Iowa dealer license entails posting a surety bond. The purpose of this requirement is to guarantee the financial responsibility of your dealership.

Unlike insurance, surety bonds protect the state and your customers from any fraudulent activities that you might engage in. in this sense, they are an extra security for the general public.

In the case of Iowa, the required bond amount has been set at $75,000 as of July 1, 2016. While this can seem as a considerable sum, in fact, you don’t need to pay it to get bonded. Your surety bond price is only a fraction of this amount.

If you qualify for the standard bonding market, your bond premium is likely to be in the range of 1%-3%. This means you might end up paying between $750 and $2,250 to get bonded.

Your bond premium is formulated on the basis of your personal and business financials. Your surety examines your credit score, business finances and assets and liquidity. It also considers your professional experience. That’s how it estimates the risk of providing you with bonding. The lower this risk is, the lower your bond cost will be.   

Ready to start your licensing and bonding process? You can apply online today to get a free Iowa motor vehicle dealer bond quote with no obligations.

Lance Surety Bonds’ experts are here to help. For any questions about the process or your bond application, call us at 877.514.5146.

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Robin Kix

Robin Kix is currently the Renewal Department Manager. Since joining Lance Surety in 2014, she has helped thousands of businesses throughout the nation remain compliant at the federal, state and local level. She has significant experience supporting commercial bond lines, particularly in the automobile, transportation and construction industries. Robin and her team work together to create a positive customer service experience at the time of every policy renewal, whether that be finding the best pricing or offering additional assistance.

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