How to Get a South Dakota Dealer License

Published: Dec 5, 2019
south dakota dealer license

 

Is launching a car dealership in South Dakota on your mind? In order to start your car sales business, you need to obtain a South Dakota dealer license. It is required by state authorities that oversee the industry.

The licensing process is elaborate and entails meeting a list of requirements. They ensure you will adhere to the legal framework in the state. Among them is posting an auto dealer bond, which guarantees your legal compliance. 

In this guide, you can find out the essential steps that you have to go through to get licensed and bonded.

1. Determine the right auto dealer license type 

The licensing process for auto dealers is handled by the Motor Vehicle Division (MVD) at the South Dakota Department of Revenue. Here are the license types that you can choose from:

  • Vehicle Dealer – new and used vehicles
  • Used Vehicle Dealer – selling more than 5 used vehicles in 12 months
  • Mobile/Manufactured Home Dealer – selling 3 or more mobile homes or manufactured homes in 12 months
  • Motorcycle Dealer – motorcycles
  • Snowmobile and/or Boat Dealer – new and used snowmobiles and/or boats
  • Trailer Dealer – more than 3 new or used trailers in 12 months
  • Emergency Vehicle Dealer – new and used emergency vehicles 

2. Get to know the South Dakota dealer license requirements

The MVD imposes rigorous rules for the licensing of dealers. Applicants have to provide information and satisfy the following requirements:

  • Personal information about owners and managers
  • Business entity documents
  • Location requirements – size, space, telephone, business hours and lot
  • Lease agreement for the business location (if applicable)
  • Service facility (for franchised dealers)
  • Franchise agreement (for franchised dealers)
  • $300,000 public liability insurance for vehicle, used vehicle and motorcycle dealers
  • Surety bond 

You can learn further details about the criteria in the MVD’s Dealer Requirements document. 

3. Prepare your paperwork

south dakota dealer licenseThe starting point for your actual licensing process is the South Dakota dealer license application form. You have to fill it in and attach proof of meeting the criteria detailed above. 

You will also need to obtain the following documents from other authorities: 

  • Business entity registration from the Secretary of State 
  • Zoning letter from local authorities

4. Obtain the necessary South Dakota auto dealer bond 

Most types of dealers in the state have to get a surety bond in order to receive their license. The bond is a safety mechanism that protects your customers by guaranteeing your legal compliance. You can receive a claim against the bond if you fail to follow the law in your operations as a licensed dealer. 

The amounts of the South Dakota auto dealer bond are:

  • $25,000 for vehicle, used vehicle and mobile/manufactured home dealers
  • $20,000 for boat dealers
  • $10,000 for trailer dealers (over 3,000 lbs)
  • $5,000 for motorcycle and snowmobile dealers 

5. Apply with your full document set

You can apply by mailing your documents to:

State of South Dakota
Motor Vehicle Division
445 East Capitol Ave
Pierre, SD 57501-3185

You will then receive an on-site inspection of your business location. If you pass the review and your paperwork is complete, the MVD will issue your license. 

The fees for the different license types are as follows:

  • $300 for vehicle, used vehicle, emergency, and mobile/manufactured home dealers
  • $250 for motorcycle and boat dealers
  • $150 for snowmobile dealers
  • $125 for trailer dealers

Afterwards, you can apply for your South Dakota dealer plates. The fee schedule for them is (plus $5 mailing fee and $1 decal fee):

  • $101 for vehicle dealers
  • $24 for trailer and motorcycle dealers 
  • $20 for boat dealers
  • $10 for snowmobile dealers

6. Undergo the South Dakota dealer license renewal

You have to renew your license every year. The actual paper license is valid for 5 years, but you have to prolong it annually. The MVD sends a renewal notice 3 months before your license expiration date. 

The renewal fees are:

  • $175 for vehicle, used vehicle, boat and emergency vehicle dealers 
  • $150 for mobile/manufactured home and motorcycle dealers
  • $125 for snowmobile dealers
  • $100 for trailer dealers

 

Do you need further information about getting your South Dakota dealer license and bond? You can reach us at 877.514.5146.

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.

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