Auto Dealer License FAQ

What can I do with an Auto Dealer License?
How hard is it to get a Car Dealers License?
How much will it cost to get my Auto Dealers License?
Does it take an Auto Dealers License to get into an Auto Dealer Auction?
Can I use someone else's Car Dealer License to buy cars at Car Dealer Auctions?
How much money can I make with a Car Dealer License?
What is the Automobile Dealer Training Course?
Can I use my Car Dealers License to sell cars on Ebay and Craigslist?
Can I use my Auto Dealer License to buy cars in the US then sell them overseas?
Where can I learn more about dealer auctions?
What is a Federal Buyers Guide?
What is the Truth in Lending Act?
What is the Equal Credit Opportunity Act?
What is the Gramm Leach Bliley Privacy Act?
What is the Red Flags Rule?
What is IRS Form 8300?
Why to I need to know about the United States Patriot Act?
What is the Driver Privacy Protection Act?
What is the difference between a Wholesale Dealer and a Retail Dealer?
Do I have to pay sales tax on vehicles I purchase?
Can I buy or sell a car with a "Blank" title?
Where can I get a Dealer Surety Bond?
What type of dealer insurance do I need in order to have a Auto Dealers License?
Where I can I obtain my State's Dealer License Application?
After I am licensed, where can I find my State's Dealer License forms?
I have a location in mind for my dealership, what is next?
What is a Dealer Floor Plan?
What is Sub-Prime Financing?
What is a Buy Here Pay Here Car Dealership?
How can I make sure I am complying with Federal Dealer Laws?
I have other questions about obtaining an Auto Dealers License, what should I do?

What can I do with an Auto Dealer License?

An Auto Dealer License will allow you to enter every dealer auction in North America. You can buy vehicles at these auction at wholesale prices, then sell them on your lot at retail prices. Your Auto Dealer License will allow you to purchase a vehicle, then re-assign the vehicle to the next buyer. After you acquire your Auto Dealer License, you can obtain an Auction Access Card. Your Auction Access Card will allow you to receive a bidding pass at every wholesale dealer auction on sale day. Your bidding pass will allow you to easily pass auction security to enter the vehicle bidding lanes. You can also obtain this card by going directly to the Auction Access website. Your Car Dealer License will also allow you to bid on cars through online auctions, then have them shipped to your lot to re-sell. Your Car Dealer License will allow you to gain access to many insurance and salvage auctions that are only open to licensed auto dealers. An Auto Dealer License allows you an unlimited income potential.

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How hard is it to get a Car Dealers License?

It is much easier to get a Car Dealers License than most people expect. Each State has a step by step process that you must follow to get your Car Dealer License. Once you have completed each step in your particular State, you will have your Car Dealer License. To find out how to get a Car Dealer License in your State, click on Get Licensed!

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How much will it cost to get my Auto Dealers License?

Dealer license fees vary from State to State. Normally you will be required to pay from $200 to $2500 per year depending on your State requirements. Larger States tend to charge more for an Auto Dealers License than smaller States. Most States also require you to also have a Dealer Surety Bond and Dealer Insurance in effect.

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Does it take an Auto Dealers License to get into an Auto Dealer Auction?

Yes. Dealer Auctions require you to hold an active Auto Dealer License before you enter the bidding lanes. Once you obtain a Auto Dealer License, you can enter every Dealer Auction throughout the United States, Canada, and many Dealer Auctions in other countries all around the world. Only licensed dealers are allowed into Auto Dealer Auctions.

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Can I use someone else's Car Dealer License to buy cars at Car Dealer Auctions?

Absolutely not. No State in the country allows a person to purchase a vehicle under another person's Auto Dealer License, then sell the vehicle for a profit. In order to profit from a Car Dealer License, you must legally hold your own license. Some Dealer Auctions allow a licensed dealer to assign an employee permission to purchase vehicles under their license number, but only with a signed and notarized Dealer Auction buyers authorization form. Buying and selling vehicles with another person's Auto Dealer License will get you banned permanently from most auctions and is illegal in all States.

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How much money can I make with a Car Dealer License?

An Auto Dealer License allows an unlimited earning potential. If you sell 6 vehicles per month you can gross six figures per year.

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What is the Automobile Dealer Training Course?

The Auto Dealers Training Course contains extensive instructions on how to operate your dealership profitably while staying fully compliant. Learn more about the Dealer Training Course by clicking here.

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Can I use my Car Dealers License to sell cars on Ebay and Craigslist?

Absolutely. Ebay and Craigslist.org have become the premier selling method for most car dealers throughout the country. Although most States will still require you maintain a retail lot, you can purchase vehicles at Dealer Auctions, then sell your vehicles to purchasers on Ebay and Craigslist. You Dealer Training Manual contains up to date, easy step by step instructions on how to post your vehicles on Ebay and Craigslist. You can even sell your vehicles to individuals or dealers in other countries. Its totally legal with your Auto Dealer License. Having a Auto Dealers License offers you unlimited selling opportunities.

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Can I use my Auto Dealer License to buy cars in the US then sell them overseas?

Yes. You can purchase vehicles at Dealer Auctions then resell them to individuals, or dealers, in other countries. Many shipping companies, such as Freightmar, will pick up the vehicles you buy directly from the Dealer Auctions, then deliver them to your purchaser's shipping port of choice. You may not even have to touch the vehicles you sell and shipping vehicles overseas can cost much less than you may expect. You may also want to develop a business relationship with a car dealer or automobile distributor in another country which would allow you to export a large number of vehicles with only one business contact. Many countries in Europe, South America, Africa, and Asia are suffering from a substantial lack of vehicle inventories leading to much higher profits per vehicle. An aggressive entrepreneur with an Auto Dealers License can utilize this growing overseas opportunity for incredible financial rewards. Check with Freightmar for further export instructions.

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Where can I learn more about Dealer Auctions?

Dealer Auctions are an amazing and can be quite chaotic. When you have obtained your Auto Dealer License, you will be allowed to enter every Dealer Auction in North America. It is essential that you prepare and educate yourself completely for your first Dealer Auctions. Countless Car Dealers have went out of business in their first few months by purchasing too many vehicles, paying to much for vehicles, failing to correctly inspect a vehicle, and not knowing what to expect in their first few Dealer Auctions. Your Free Dealer Auction Marketing Guide is now available online. It contains extensive step by step instructions for purchasing vehicles at Dealer Auctions. Don't get burned, educate yourself before your first Dealer Auction purchase.

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What is a Federal Buyers Guide?

Every Car Dealer in the United States is required to disclose whether or not they are offering a warranty on a vehicle before the test drive. The Federal Trade Commission requires every Car Dealer in the United States to post a Federal Buyers Guide on every vehicle they are selling. Dealers that fail to follow this law face fines from $1000 to $11,000 per violation. Learn more about the FTC Buyers Guide Rule by clicking here.

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What is the Truth in Lending Act?

The Truth in Lending Act requires all lenders, or dealers that take loan applications, disclose all terms of the loan to the customer at the time of the loan application. The Truth in Lending Act requires you to disclose the length of time of the loan, the entire amount financed, the identity of the creditor, along with several other important disclosures. Learn the requirements of the Truth in Lending Act by clicking here.

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What is the Equal Credit Opportunity Act?

The Equal Credit Opportunity Act ensures that all consumers that apply for lending are given an equal chance to obtain credit. Any dealer that fails to follow this very important law can face fines of up to $250,000. Click here for a full explanation of this law that easily explains how legally conduct credit application interviews.

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What is the Gramm Leach Bliley Privacy Act?

The Gramm Leach Bliley Privacy Act is a federal law that requires Auto Dealers to protect the financial privacy of their customers. This law requires that you safeguard the financial information that you obtain from your customers. Click here for extensive instructions on how dealerships can correctly operate under the guidelines of the Gramm Leach Bliley Privacy Act.

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What is the Red Flags Rule?

The Red Flags Rule is a new Federal Trade Commission law that went into effect on August 1, 2009. It requires all US Auto Dealers to have a written policy on file that shows how they prevent and report any type of identity theft. Every Auto Dealer in the United States is required to keep this document on file at their dealership. Failure to maintain this document at your dealership can lead to very large Federal fines. Click here to learn more about the Red Flags Rule.

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What is IRS Form 8300?

The Internal Revenue Service requires every United States Car Dealer to report certain cash transactions and payment methods within 15 days, or face Federal Fines of up to $25,000. Some cash transactions, cashiers checks, money orders, bank drafts, and travelers checks must be reported on IRS Form 8300. Click here for easy step by step instructions on Car Dealer's Federal cash reporting requirements.

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Why to I need to know about the United States Patriot Act?

The USA Patriot Act was enacted after the September 11, 2001 terrorist attacks against the United States. A Federal Law Enforcement agent may need access to your dealership files to help fight terrorism.  Find out how this law effects Car Dealers in the Dealer Training Manual.

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What is the Driver Privacy Protection Act?

The Driver Privacy Protection Act protects the privacy of all "Drivers". You must keep all of your records under lock and key.

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What is the difference between a Wholesale Dealer and a Retail Dealer?

A Wholesale Dealer License only allows you to sell cars to other dealers. A Wholesaler may not sell vehicles to individuals. A Retail Auto Dealer License will allow you to not only buy and sell vehicles to other dealers, but will also allow you to sell vehicles to customers. Many States now require a Wholesaler to have a business building, lot, and sign. Also, many Dealer Auctions are offering to run dealer inventories through the wholesale auction lanes at no charge if they don't sell, which has effectively eliminated most of the profit for wholesalers. A Wholesaler can only sell dealer to dealer. A Retailer can dealer to dealer, and dealer to customer.

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Do I have to pay sales tax on vehicles I purchase?

No. Dealers only pay taxes on the profits made from selling vehicles. Every State in the United States requires anyone without a Car Dealer License to pay sales tax when purchasing a vehicle. Your Car Dealer License will allow you to purchase an unlimited number of vehicles without paying sales tax. You pay taxes only on your profits. However, if you every surrender your Auto Dealer License, your State may require you to pay sales tax on your remaining inventory. If you decide not to renew your Auto Dealer License, be sure to sell your entire inventory before you allow your Auto Dealer License to expire.

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Can I buy or sell a car with a "Blank" title?

Never. You can never, ever buy or sell a vehicle with a "Blank" title. Sometimes an illegal automobile dealer will ask a buyer or seller to sign the back of the title, but will leave the purchasers information blank. This allows the illegal car dealer to sell the vehicle to the next person for a profit, with no record of the transaction. This illegal dealer has also skipped paying the sales tax on the transaction, so these titles are also called "Skipped' or "Open" titles. Possession of an open, blank, or skipped title is against the law in all 50 states and every Canadian Province. Some States are now charging any person or dealer possessing these titles with a felony. Never, ever support an illegal dealer. Never buy a vehicle from a person with a blank title. You may only legally purchase a vehicle from the person whose name appears on the front of the title.

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Where can I get a Dealer Surety Bond?

Dealer Surety Bonds can be purchased from an insurance agent and their pricing is based on your credit scores. If you have good credit, a $25,000 Dealer Surety Bond will cost around $150.00 per year. If you have bad credit, or have had a bankruptcy, the cost of your Dealer Surety Bond could be much, much higher. For a free quote on your Dealer Surety Bond, just go the Dealer Surety Bond page.

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What type of dealer insurance do I need in order to have a Auto Dealers License?

Almost every State in the country requires you to show that you have proof of dealer insurance before you obtain your Auto Dealers License. You will have to obtain a Dealer Insurance Garage Policy. A Dealer Garage Insurance policy will protect you when you are driving your vehicles back and forth from an auction, it will protect you when your customers are test driving vehicles, and it will protect you if some falls and breaks a leg on your lot. Dealer Insurance can be very expensive and newly licensed dealers normally pay the highest rates. A liability policy can start at around $150.00 per month depending on your location and the number of Dealer Plates that you possess. Full comprehensive, collision, theft, hail damage, and errors & omissions Dealer Garage Insurance Policies can cost much more. Normally, the longer you hold a Car Dealer License, the lower your dealer insurance premiums. If you have questions about Dealer Insurance or would like a free quote, please go to the Dealer Insurance page.

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Where I can I obtain my State's Dealer License Application?

You can download your State's Dealer License Application on the Dealer License Application page.

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After I am licensed, where can I find my State's Dealer License forms?

After you obtain your Car Dealers License you can find most of your State's Automobile Dealer License Forms on the State Dealer Forms page.

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I have a location in mind for my dealership, what is next?

You will need to make sure you can operate a motor vehicle dealership at that location. Just contact your county or city zoning & planning department to make sure your chosen location will meet all zoning requirements. Don't every lease or purchase a property for your dealership until you are positive the local zoning laws allow motor vehicle operations.

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What is a Dealer Floor Plan?

A Dealer Floor Plan is a loan for your vehicle inventory. Most lending institutions will charge you monthly interest on the amount of the loan you have used to purchase your vehicle inventory. When you sell a vehicle, you will be expected to pay down your loan balance, while you keep the profit. Most Dealer Floor Plan providers require you to sell a vehicle within 90 days. If a dealer cannot sell a vehicle within 90 days, they usually run the vehicle back through the auction so they can pay down the balance on their floor plan. You can find Dealer Floor Plan providers on the Dealer Floor Plan page.

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What is Sub-Prime Financing?

Sub Prime Financing is the process of finding loans for your customers with less than perfect, or bad credit. Several companies throughout the country have special lending programs that assist dealers in obtaining financing for customers with bad credit. These loan programs generally have higher interest than other loans so be sure to disclose all interest rates in writing to your customer..

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What is a Buy Here Pay Here Car Dealership?

 When you operate a Buy Here Pay Here Car Dealership, you are financing your vehicles to customers that are usually not able to obtain a bank loan. For example, if you purchase a vehicle at an auction then sell it directly to your customer. Your customers may mail the payments directly to your dealership or your customers may choose to have their payments automatically deducted from their bank accounts every two weeks. This ensures the customer and the dealer much less paperwork. To find a list of companies that assist your Buy Here Pay Here Car Dealership, click here

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How can I make sure I am complying with Federal Dealer Laws?

Always be sure to consult with an attorney before opening any business. You may use the dealertraining.org Federal Dealer Compliance page as a reference for Federal Compliance, but be sure to obtain legal advice regarding any State or Federal compliance issues. Always make sure your dealership is fully compliant.

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I have other questions about obtaining an Auto Dealers License, what should I do?

Good Luck In Obtaining Your Auto Dealer License

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