In Alabama any person, corporation or partnership who sells motor vehicles for retail or wholesale purposes must have a car dealer license.
The general rule of thumb is that if you deal 5 or more vehicles in a 12-month period, you must have a Alabama Dealer License.
Not sure if you need a dealer license? Check out this post on selling cars without a license.
How to get an Alabama Car Dealer License
To get an Alabama Dealer License you will need to do the following: apply for a tax number, complete an Alabama Dealer License Application, purchase a surety bond, secure insurance, pass local zoning and complete, and provide other documentation and fees. The exact steps are listed below:
Step #1: Apply for a tax number on the Alabama Revenue site
Step #2: Complete an Alabama Car Dealer License application
You can apply for your license online at the Alabama Department of Revenue Motor Vehicle Division website.
Step #3: Provide photos of location and sign
Take pictures that show your location and signage are up to Alabama code.
Step #4: Purchase Insurance
You will need the following insurance for your dealership:
$50,000 combined bodily injury/accident
$25,000 bodily injury/person/accident
$25,000 property damage/accident
or a combined single limit of $75,000/accident
Step #5: Pay $25 fee
Step #6: Purchase an Alabama Car Dealer Bond
A motor vehicle dealer bond (also known as an auto dealer bond) guarantees that dealers act in accordance with all federal, state, and local laws, as well as tax guidelines, that relate to motor vehicles. The bond protects your customers from fraud or misrepresentation during a sale of a motor vehicle.
- A new car dealer in Alabama will need to purchase a bond in the amount of $25,000.
- A used car dealer in Alabama will need a $10,000 bond.
The price of your Alabama Motor Vehicle Dealer Bond will vary. The price you pay depends largely on your credit score, application/financial credentials, and how you chooses to finance the bond premium. If you have a good credit score and financial credentials, you will pay at a lower rate than someone with a poor credit score.
Step #7: Submit
To receive your Alabama Car dealers license, you will need to bundle up your printed transmittal sheet, the original copy of your bond, an insurance certification form, a copy of government ID for each owner of the business, and pictures of the sign and lot for your dealership.
Then mail everything to:
Alabama Department of Revenue
Motor Vehicle Division - Dealer Licenses
P.O. Box 327643
Montgomery, AL 36132-7643
How Long Does My License Last?
The Alabama Car Dealer License licensing period runs from October 1st to September 30th of the following calendar year. Regardless of when the license was issued, it expires on September 30th.
Licensees who wish to renew their license must renew it no later than October 31st of the subsequent year before the license expires. For example, if your license expires in the year 2017, you must renew by or before October 31st, 2016 to maintain a valid license.