Used Car Dealership: How to Become Used Car Dealer in US?

Selling cars can be a very profitable source of income. As with any business activity, there are several things you will need to understand in order to establish your own used car dealers in your state. Much of this involves moving car across country, meeting licensing requirements and establishing insurance and bonds.

How to Become a Used Car Dealer

Becoming a used car dealer requires more than just inventory. To operate legally in your state, you must obtain an operating license, dealer license, surety bond, and insurance. Below is an easy-to-follow, step-by-step guide to help you in your new venture of opening a used car dealership.

How does a Used Car Dealer generate Income?

As a used car dealer, you can make money in a variety of ways. You can only buy automobiles from wholesale dealerships and resell them for a profit. In the beginning, this can be your main source of income. You can easily get the vehicle shipping quotes from different service providers to get these cars to you.

Over time, you may try to get damaged vehicles. Once the repairs are done, you can sell the automobile for a higher profit. Additionally, expanding your used car dealership to include vehicle repair, maintenance, notary services, and parts can be a great way to increase your income.

Steps to Become an Authorized Used Car Dealer

1.    Prepare a Business Plan

Before starting any legal process or setting up your firm, you must first sit down and create a business strategy. It describes your purpose, how you plan to organize your firm, your strategy of operations, and how you finance it. By making the effort to do this now, you’ll be prepared when you apply for financing, and you’ll stay on track as you work toward becoming a wholesale or retail dealer.

2.    Get a Business License

Next, you need to obtain an official business license to operate your used car dealership. You can obtain a license by visiting your local business licensing body or the Secretary of State’s website. The DMV will need some basic information about you and your business.

If you plan to have employees in your business, you will also need to obtain an Employee Identification Number (EIN) through the IRS website. This EIN must be provided with your dealer license application form for your application to be evaluated.

3.    Submit an Application for a Used Car Dealer’s License

A car dealer license is another requirement before starting your startup. This car dealer license can be obtained through your state’s Department of Motor Vehicles (DMV) website. From state to state, the specific requirements for obtaining this dealership license and business zoning will vary.

4.    Get an Auto Dealer Bond

You should anticipate that most states will require you to obtain insurance and a surety bond. This is a dealer bond that provides protection in case you violate the state’s mandatory regulations. This car dealer bond is often available for a small fraction of the total value of the bond.

Your credit score and other factors will play a major role in deciding your bond amount. Before deciding which bond to buy, it is highly recommended to get estimates from multiple suppliers.

5.    Fill your Space with Automobiles

After obtaining your business license, vehicle dealer surety bond, and used car dealer license, it’s time to start stocking your business location with cars and car transport. Many new car dealers get their inventory directly from the automaker. However, used automobile stores obtain their inventory from a variety of sources, including:

  • Private Parties
  • Wholesale Dealers
  • Auctions

Having automobiles ranging from sedans to pickup trucks is a great way to attract a large number of customers. You can easily acquire cars from auctions and connect with the best auto shipping company in US to get them in your garage.

How to Get the License for Used Car Dealer

The steps below explain how to get a license and bond to open a car dealership. Check your state’s regulations for specific restrictions and regulations.

Contact your Local DMV

Each state has its own standards for establishing an automobile dealer. As a Georgia used automobile dealer, you should contact the Georgia DVM. Your state will inform you of the requirements for obtaining a license as a used automobile dealer. They will also provide you with any relevant paperwork to complete and further instructions.

Meet the Requirements

Depending on the state you live in, this can be a long list. Before obtaining a license as a vehicle dealer, the majority of states require that you meet certain basic requirements, such as obtaining a legally zoned location and obtaining approval for your location and business.

Complete the Car Dealer Licensing form

Your local DMV will provide you with the appropriate application for a used car dealer license for your business.

Buy Automobile Dealership bonds

Almost every state requires the purchase of dealer bonds from vehicle dealers. A car dealer bond is a type of client protection surety bond. With the help of this, you can easily ship a car from another state.

Submit an Automobile Dealer Application

Submit your application for a vehicle dealer license, dealer bond, proof of insurance, and other required documents to your local DMV or Auto Dealer Licensing Service Department and wait for approval.


A used car dealer can be a great option to start your own flexible business. A primary advantage of opening a used car dealership as opposed to a new car dealership is the ability to sell automobiles of various makes and models.

used car dealers