The Complete Rhode Island Dealer License Guide (2021)
Making your first step to offer cars for sale in Rhode Island? If you want to sell more than 4 vehicles per year, you will need to obtain a Rhode Island dealer license.
The licensing process ensures that you meet all state requirements necessary for the functioning of a car dealership. One of the criteria that you have to satisfy is to post an auto dealer bond. Its purpose is to guarantee you will follow the law in your operations.
For a full overview of the licensing and bonding procedures in the state, you can delve into the extensive guide below.
1. Choose the right auto dealer license type
Car dealerships in Rhode Island have to get a license from the Division of Motor Vehicles (DMV) at the state Department of Revenue. There are three license types that you can obtain:
- New Vehicles Dealer
- Used Vehicles Dealer
- New and Used Vehicles Dealer
2. Get familiar with the Rhode Island dealer license requirements
In order to ensure you are a suitable candidate for the job, the DMV enforces strict criteria that you have to satisfy to get licensed.
Before you start the process, you have to get an approval of your proposed dealership name and location from the Dealers’ License & Regulation Office. The business name of used dealerships has to contain the words “auto sales.”
The requirements include providing the following:
- Personal information about owners, members and officers
- Business entity information
- Notarized financial statement from a certified public accountant (CPA)
- Proof of ownership or lease of your business location
- Business location requirements (2,400 sq. ft. minimum size building and 2,400 sq. ft. minimum size for outside, business sign, telephone line)
- 4 photos of the outside of building from all angles
- Employee list
- Manufacturer/Distributor Letter of Intent and Dealer Agreement (for franchise dealers)
- Dealer plate insurance coverage
- $50,000 line of credit from a financial institution
- $50,000 surety bond
3. Prepare your paperwork
You have to complete the Rhode Island dealer license application form. Together with it, you need to provide proof of meeting the requirements in the previous section.
In addition to them, you also have to obtain the following documents from other institutions:
- Criminal background check for each owner, partner, or corporate office (Bureau of Criminal Identification (BCI)
- City/town license for dealerships based in Central Falls, Cranston, East Providence, Esmond, Exeter, Foster, Johnston, Pawtucket, Providence, Warwick West Greenwich, and Woonsocket (for used car dealers)
- Letter of zoning approval from city/town approving the sales of motor vehicles at that proposed dealership address
- Articles of incorporation, minutes showing the election of all corporate officers, fictitious name report, and a letter of good standing from the Rhode Island Secretary of State (for corporations)
- Sales tax permit from the Rhode Island Division of Taxation
4. Post the required Rhode Island auto dealer bond
Auto dealers in Rhode Island have to post a surety bond as a part of the licensing process with the DMV. The bond works as a safety mechanism that protects the state and your customers.
The amount of the Rhode Island auto dealer bond is $50,000. In order to get bonded, you have to pay a small fraction of it, which is called the premium. It represents between 0.75% to 5% of the required bond amount for applicants with stable finances. The main factors that influence your premium are your personal credit score, business finances, and any fixed and liquid assets you may showcase.
5. Apply with your full document set
When you have filled in the application form and obtained all necessary documents, you have to mail them to:
Division of Motor Vehicles
Dealers’ License and Regulation Office
600 New London Avenue
Cranston, RI 02920-3024
You also need to cover the licensing fee of $301.50.
When you have submitted the full document set, the Licensing Aide will contact you to finalize your application process. If you have fulfilled all requirements, you will receive your Rhode Island dealer license.
6. Undergo the yearly renewal
The licensing period runs between January 1st and December 31st of each year. If you want to prolong your legal operations, you have to renew your license before the expiration date. The deadline for renewal applications is October 31st every year.
Have more questions about getting your Rhode Island dealer license and bond? You can contact our bonding experts by calling us at 877.514.5146.
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