The business of selling and buying cars has a lot of potential if you play your cards right. You might think that it can be very difficult to get into it. But, that isn’t true.
You can set up your own car dealership but before you start running out your door to buy your first car to sell. You’ve to get your auto dealer license.
Not sure how to do it? We’ll tell you 5 tips to help you start your own car dealership in no time.
Read on to learn more!
What You Need to Know About Getting Your Auto Dealer License?
So your dream has always been to have your own car dealership. You’re going through with it and not looking back. To have your first car lot, you need to get your dealers license.
The process is easy if you do your homework and follow the process down to a T. Be ready to do a lot of research. It will depend on the car dealership you’re setting up.
Are you only going to sell used cars? Where are you going to do business? Are you going to sell new cars too?
These are some of the questions you should ask yourself before you begin the process. Every state has their requirements. These will also depend on the type of business you’re going to conduct.
Here are 5 tips you need to know about getting your dealership license to get started with the right foot:
1. Find out What Type of License You Need
Not all dealers licenses are the same. If you’re going to sell used cars, you might need a used motor vehicles dealer license. But, if you’re planning on wholesaling cars you’re also going to need a wholesale dealer license.
The license you’ll have to get will depend on the types of vehicles you’re planning on selling. You won’t need the same licenses if you’re selling trailers or motorcycles.
If you’re planning on selling new vehicles, you’ll need to get another license. In some states, it’s the franchised dealer license. The license requirements may vary from state to state.
You should do your research before applying to make sure you’re getting the dealership license you need. A good place to start is your state’s DMV website. If you want to make sure, you could visit your local DMV office to learn more about your state’s requirements.
2. Make Your Own Budget and Prepare for All the Licensing Costs
Deciding to start your own dealership is just half the battle. Before going through with the process, you’ve to make your own budget. Getting that first car to sell isn’t the only cost you’ll have to get started.
In your budget, you should take into account all the licensing fees, vehicle purchases, bond fees, insurance policy, business set up fees, office and lot improvements. These costs can add up so you shouldn’t skip any of them.
Make sure your budget is a realistic estimate of the costs. When you’re setting up a business, you’ll always run into unforeseen costs.
That’s why you’ve to try to be as accurate as you can on your budget. This way you’ll be ready for when the unexpected happens.
3. Research Your Bond Options and Get Yours
To get your auto dealer license, most states will require an auto dealer bond. States like Texas require a $25,000 auto dealer bond. This requirement depends on the type of license you’re getting.
Some licenses are exempt from this requirement. So if you’re a trailer or semitrailer, franchised, or travel trailer dealer you might be exempt. Your DMV should be able to give you more information about this requirement.
An auto dealer bond works as a guaranteed contract between your business that’s the principal, the DMV as the obligee, and the bond provider that’s the surety. The bond is a guarantee that your business will meet its contractual obligations and follow the laws. They require it as a safety net for the general public.
When you’re choosing your surety company, you’ve to make sure you pick one that has a good rating. That’s the best way you can be sure that your business will receive the backing you need.
You should consider getting your bond from A-rated, T-listed surety companies. If you get a bond company like these, you’ll make sure your bond is guaranteed. You’ll be confident that your customer is protected as well.
4. Look into Getting Garage Liability Insurance
When you have a car dealership, you expose yourself to many risks such as accidents, vandalism, and even theft. That’s why you should look into getting garage liability insurance.
In states like Oklahoma, this type of insurance policy is a requirement to apply for your car dealership license. Garage liability insurance will ensure your claim is paid in full if an accident happens. It doesn’t matter if it’s from flood, collision, fire or theft.
An insurance agent can give you a better idea of what’s the ideal coverage for your business. Do your homework to learn more about these policies before sitting down with your agent.
5. Prepare and Triple Check All Your Documents Before Submitting Your Application
Before submitting your application, you’ve to make sure you’ve all your ducks in a row. Some of the documents you might’ve to submit are proof of business permanent location, certificate of incorporation for the company, surety bond, certificate of insurance, among other documents.
You should make your own checklist of documents you’ve to submit. Remember that if you send an incomplete application, they’ll deny you the license and charge you the fee. Make sure you meet all the licensing requirements before sending any paperwork in.
Wrapping It Up
Having your own car dealership can be the start of a great business. Getting your auto dealer license isn’t difficult. The key to getting it fast is to do your homework and research your requirements.
Make sure all your documents meet the requirements and submit a complete application. If you follow our 5 tips you’ll get your dealership license in no time.
So you’ve decided to make money buying and selling cars. Want to learn how to buy a used car for your car dealership?
Check out our blog post to learn more.