How to Get a License to Sell Used Cars
May 16, 2012 by Matt Keegan
Staying within the law while you flip cars.
Your habit of buying and selling used cars privately is a hobby, but your state may have something else to say about it. In Michigan, an individual that buys, sells, brokers, leases, negotiates a lease or deals in five or more vehicles within any 12-month period is required to hold a dealer?s license. [1] In Michigan?s case, a vehicle is described as a motor vehicle, trailer coach or trailer weighing when it weights more than 2,500 pounds. Read on for some tips on how to get a license to sell used cars.
DMV Rules
Given that 50 states and the District of Columbia establish rules governing motor vehicles registered within their jurisdiction, a visit to your Department of Motor Vehicle will ensure that you?re complying with local statutes as a used car retailer. The process offered here is general and not specific to any state.
In Florida, individuals selling three or more used vehicles within a 12-month period are considered as a motor vehicle dealer. [2] Like most other states, Florida has multiple license types including franchise dealer, service facility and auctions. You?ll want to obtain the independent dealer license in the Sunshine State by filling out the appropriate application.
When you fill out your application and submit it to the DMV you?ll include the related fee. In Arizona, you?ll be required to undergo a criminal records check, by submitting a personal history form and fingerprint cards to the Motor Vehicle Division. [3] Expect your application to be denied if a felony conviction is found on your record. Arizona will reject your application if you?ve been convicted of fraud or a felony within the past five years.
Bonded and Insured
Your DMV will most likely require you to obtain a surety bond, an amount that can vary depending on what you?ll be selling. In Minnesota, that bond is $5,000 for dealers of boats and snowmobiles, but $50,000 for passenger vehicles. [4] As part of the bond and application process, the DMV may require zoning approval for you to sell cars. Check with your municipality about its requirements for you to sell an occasional car from your home. Submit that information with your application.
Once you receive approval from the DMV to operate a used car business, you?ll need to obtain liability insurance, to insure against loss. Liability limits vary from state to state and may necessitate you obtaining other insurance such as uninsured motorists liability protection.
References
[1] Michigan Department of State: Who Needs a Dealer License?
[2] State of Florida: Licensing Requirements for Motor Vehicle Dealers
[3] Arizona Department of Transportation: Licensing Information
[4] State of Minnesota: Motor Vehicle Dealers License
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