Massachusetts Dealer License Full Guide (2021)
Starting a car dealership in Massachusetts is a promising business endeavor. Your first step on this new path is to obtain a Massachusetts dealer license.
The licensing process involves fulfilling a list of requirements. They are set on the state level, but executed on local level. In some cases, the criteria include posting an auto dealer bond as well.
You can get acquainted with the steps of the licensing process in the sections below.
1. Choose your auto dealer license type
The authorities that provide Massachusetts car dealer licenses are local municipalities, which follow the state laws in their regulatory activities. The license types that you can obtain are:
- Class I – new and/or used vehicles
- Class II – used vehicles
- Class III – salvage parts
2. Get to know the Massachusetts dealer license requirements
Even though the licensing process is not conducted on a state level, the criteria that applicants for dealer licenses need to meet are mostly similar. The requirements include:
- Personal information about owners and managers
- Business entity documents
- Business location lease or ownership paperwork
- Special location requirements (for Class III salvage parts)
- Franchise agreement (for Class I new vehicle dealers)
- Proof of repair facilities or contract with a service facility (for Class II used vehicle dealers)
- $25,000 surety bond (for Class II used vehicle dealers)
For further information, you can consult the Dealer Information page provided by the Massachusetts Registry of Motor Vehicles.
3. Prepare your paperwork
As local municipalities handle the licensing, you will have to complete their specific Massachusetts dealer license application. In some cases, it is available online, while in other places you will need to complete a paper form and send it via mail.
You also need to obtain the following documents from other authorities:
- Zoning approval for your business location from the relevant local bodies
- Criminal background check from the Massachusetts Department of Criminal Justice
- Worker’s compensation insurance (if applicable)
- Flammable permit by your local Fire Department
4. Obtain the necessary Massachusetts auto dealer bond
Applicants for a Massachusetts used car dealer license (Class II) have to post a surety bond as a part of the process. The bond is a safety mechanism that protects the interests of the customers and ensures your legal compliance as a dealer.
The Massachusetts auto dealer bond is set at $25,000. To get bonded, you have to pay a premium, which represents a percentage of the required amount. It is determined on the basis of your personal and business finances. If they are in good shape, the rates that you can expect are between 0.75% and 5%.
5. Apply with your full document set
When you have compiled all the required paperwork and completed the relevant application form, you have to send it for review to your municipal authorities.
In the case of Class 3 Massachusetts dealer license applicants, a public hearing is held afterwards. You can receive your license only after a successful hearing.
The licensing fees vary between $100 and $200. The maximum fee can be $200, as it is in Boston.
6. Renew your license every year
The licensing for MA auto dealers runs for one year. The exact period is between January 1st and December 31st of each year. In order to keep your operations active, you have to undergo the Massachusetts dealer license renewal before the expiration date.
In the case of Boston, you have to send your renewal application before January 31st.
Do you have more questions about getting your Massachusetts auto dealer license and surety bond? You can contact our bonding experts by calling us at 877.514.5146.
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