How to Get a Wholesale Dealer License

how to get a wholesale dealer license guide

Your Guide to Getting a Wholesale Auto Dealer License in 2021


  • What is a Wholesale Auto Dealer License?
  • How do I Get a Wholesale Auto Dealer License?
  • What Are the General Wholesale Dealer License Requirements?
  • What Are the Wholesale Dealer License Requirement in My State?
  • What Are the Steps to Getting Wholesale Dealer License?
  • How Long Does It Take to Get a Wholesale Auto Dealer License?
  • How Much Does It Cost to Get a Wholesale Auto Dealer License? 


What is a Wholesale Auto Dealer License?

A wholesale motor vehicle dealer license is used to ensure that businesses operating across the industry practice within the law, offering protection to buyers and other dealers when trading and at vehicle auctions. Put simply, licensed dealers have been vetted to high standards, with various background checks, bonds and insurances minimizing the risk of malpractice and fraud.  

If you are planning on becoming a wholesale auto dealer, one of the first things you will need to consider getting licensed. However, unlike new and used car dealers, wholesale distributors and dealers do not sell vehicles on the retail market, only selling vehicles to other dealers or, in certain instances, at wholesale car dealer auctions.

In many states, this gives wholesale dealers an advantage because they need to comply with fewer licensing requirements. Having said this, the licensing requirements vary from state to state according to the local DMV (Department of Motor Vehicles), so it is highly important that you explore what is required of your auto dealership before you start setting up your business. 

So, to help you on your journey to becoming a wholesale auto dealer, here we explore how to get licensed.

How do I Get a Wholesale Auto Dealer License?

To obtain a wholesale motor vehicle dealer license, you will need submit a completed application to the DMV of the state or states that you plan to do business. You will need to meet a number of licensing requirements; however, these differ from state to state. 

Generally speaking, these requirements may include a registered business location, dealer surety bond, and payment of application fees, however, you can find more information on the requirements for a wholesale dealer license application below.

What Are the General Wholesale Motor Dealer License Requirements? 

Licensing requirements for wholesale dealers vary from state to state. For the sake of comprehensiveness, here are all the licensing requirements you may expect to encounter when applying for your wholesale dealer license.

  1. Pass a relevant training course
  2. Get a state business registration
  3. Find a location for your dealership and have your place of business approved
  4. Complete your wholesale dealer business license application form
  5. Submit your application and pay fees
  6. Submit an auto dealer surety bond

What Are the Wholesale Dealer License Requirement in My State?

As previously mentioned, each state stipulates different licensing requirements for wholesale vehicle dealers and exploring exactly what is required in your planned area of operation is crucial to meeting those specific requirements. 

You can find a list of relevant state DMV websites here, and you should check out the requirements for the state or states that you sell wholesale vehicles before you start setting up your business.

What Are the Steps to Getting Wholesale Dealer License?

There are five core steps that you will need to complete to obtain a dealer license. However, there may be additional considerations where you plan to operate, so it is important to thoroughly research requirements in your state. The five steps include but are not limited to:


#1 Get a state business registration

Without a doubt, this is the most common requirement you will face. To conduct business in any state, you need to get your business licensed on a government, and possibly, on a local level.

Typically, the business registration is with your Secretary of State and it will make it legal for you to conduct business under your business name. If you plan to operate your business across multiple states, you may also need to apply for different types of licenses depending on state requirements.


#2 Find a location for your dealership and have it approved (if applicable)

This requirement is valid only in SOME states. Since wholesale dealers do not sell vehicles retail, they often do not require a special business location. For example, wholesale dealers in Arizona can conduct business from their own residence.

Alternatively, even if you are required to have an office, you probably won’t need to have a display area (a lot) for your vehicles. Again, the reason for this is that the public does not require access to your vehicles.

Given the different requirements, it is best that you check with your state licensing authority or your Department of Motor Vehicles (DMV) what your specific location requirements are.


#3 Complete your wholesale dealer license application

Your dealer license application is the most important document you need to complete. The application process will usually require you to provide personal and business information. You may also need to respond to background check questions about both your business and your personal life. 

As part of your application, you will likely need to provide a surety bond and, possibly, pass a dealer training and an exam. See the next section for more information about the wholesale dealer bond requirements. 

On the other hand, while new and used dealers sometimes need to have a designated agent or someone occupying a similar position, wholesale dealers frequently do not need to meet such a requirement.


#4 Apply and receive a wholesale auto dealer surety bond

Like all other auto dealers, wholesale dealers must also frequently provide a surety bond when applying to get licensed. To get bonded, wholesale dealers need to pay a bond premium to the surety which issues the bond.

This premium is determined by the surety based on the dealer’s personal credit score. Occasionally, other financial information may also be requested by the surety to better assess an applicant.

The higher an applicant’s credit score is, the better their bond rate will be.

Applicants with scores over 700 FICO can expect to get some of the lowest possible rates on their bonds.


#5 Submit your application and pay fees

Some states will require you to pay both application and licensing fees, whereas in others only one type of fee is required. Typically, once you submit your application and pay the fees, you can expect to have your license issued within 2-3 weeks’ time.

For more information on applying for a surety bond for your wholesale auto dealer license, contact Lance Surety today to discuss your options and get a quote.

How Long Does It Take to Get a Wholesale Auto Dealer License?

The time it takes you to get a wholesale auto dealer license will depend on your existing qualifications and the state in which you apply. For example, if you are required to pass certain exams or tests in order to apply, this can often take many months, whereas if your state does not require these qualifications, you may receive your license in as little as 2 to 3 weeks after you have submitted your application.

How Much Does It Cost to Get a Wholesale Auto Dealer License? 

The costs associated with getting your wholesale dealer bond will depend on your specific state and your credit score. You will need to factor in quotes from insurance companies and surety bond agencies, as well as any costs incurred in registering your business and gaining the necessary qualifications. 

However, generally, the application fee for non-retail auto dealers is around $200, however, it’s worth checking with your local DMV as to the exact amount so you can build a business plan that reflects the true cost of your auto dealer license.


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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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