State Records Inspections

Records Inspections

Now that you have your license, dealer insurance, and all necessary business licenses, what should you purchase first, a car, truck, motorcycle, a recreational vehicle, a jet ski? No, you need a copy machine. Your very first and most important investment in your new business will be a copy machine.

You must make copies of every piece of paperwork that comes across your desk. Always remember to document, document, document. It is imperative that you have a very lengthy paper trail. You will never have too much paperwork. Why do you need all this paperwork? Most states require you to keep copies of all documentation that is necessary to run your business and be ready to produce these documents at any time.

You will normally be required to keep a record of the vehicle identification number, odometer setting, manufacturer’s name of all motor vehicles or trailers possessed along with the name and address of the previous owner. You must also keep titles, copies of titles, title applications, temporary permits, bills of sales, or invoices, riders, disclosure statements, affidavits, inventory, odometer disclosure statements, temporary permits, insurance documents, and all related documents that are necessary to maintain your dealer license.

Most states require you to keep these records in your place of business at all times and they must be available for inspection during normal operating hours. You will be required to keep all records from 3 to 10 years. Most states require you to produce these to law enforcement officials at any time. Representatives of your state’s motor vehicle dealer licensing bureau and most law enforcement officers can inspect your files without notice at any time.

A great way to keep your files is in a large fireproof file box with a hinge on the lid like theones made by Sentry. They are fireproof so if your dealership ever burns down you will still have the files your state requires you to keep. Be sure to keep the files in an organized manor that will make it easy for your state dealer license bureau to conduct a records inspection.

These surprise inspections are called “Records Inspections”. Your state wants to make sure you are keeping an accurate account of all vehicles you have had in your possession along with a record of your buyers. Records inspections are often triggered by complaints by your customers to the state. If you receive a complaint against your dealership, prepare an inspection of your records within a couple of days.

How do you avoid a records inspection? The best way to avoid a records inspection is you keep your customers as happy as possible. Unhappy customers will make complaints against your dealership. If you disclose every minor mechanical malfunction you know about a vehicle to your customer before the sale, you will gain a great amount of trust with this customer. If you know the transmission is slipping, tell the customer in advance. If you know the rear end is making noise, tell the customer. If you know the brakes are old and need replacing, tell the customer. By telling the customer every flaw you know about the vehicle, you will gain a great amount of trust from that customer, while earning an honest reputation. If you tell the customer that there is nothing wrong with a vehicle, when you know it has some hidden mechanical issues, you will gain a reputation as a dishonest dealer. A bad reputation will spread like wildfire. You will also have many unhappy customers and unhappy customers will make complaints about your dealership to the state.

Most states have a toll free number and special website for customers to make these complaints about motor vehicle dealers. If you have frequent complaints against your dealership and you do not keep the required amount of paperwork, you can have your dealer license suspended or permanently revoked.
You basically want to operate your dealership under the radar. You do not want your state dealer license bureau hearing the name of your dealership pop up again and again. If they receive several complaints about “ABC Motors in Anywhere, Kentucky” they will know there is an obvious problem with the way the dealership is being operated.

Your first year in business will be the most important year in the life of your dealership. It will be the year that you begin your positive reputation as an honest motor vehicle dealer.

Records Most States Require You to Keep

•Proof of Ownership for Each Vehicle
•Vehicle Identification Numbers & Odometer Settings
•Current Vehicle Titles & Copies of Sold Vehicle Titles
•Temporary Permits & Title Riders
•State & Local Licenses
•Title Applications & Bills Of Sale
•Copies of Notice of Sale Forms
•Copies of Monthly Sales Reports
•All Records Required by Your State Statutes
•Keep All Records a Minimum of 3 Years

Federal law requires odometer disclosure statements to be kept for 5 years.

Be sure to contact your state dealer license bureau to find out your state record inspection requirements