Do you love the smell of a new car? It definitely gives a special feeling of comfort, satisfaction and even success. But the truth is, a newer used car can save a customer between 30 and 40% of the regular price. Especially today, when the economy’s recovery seems to be a bit shaky and employment rates are still unstable, many people in Alabama might be eyeing used cars to save up some money.
Read on for some basic statistics that can give you an idea about how the auto business is doing in Alabama. Also, in case you want to get into it, learn about the basic requirements involved in obtaining an Alabama used car dealer license and a surety bond.
Alabama Car Sales in 2012
The National Automobile Dealers Association (NADA) hasn’t yet released its 2014 report that contains data about sales in 2013. So we’ll instead look at the one available from last year, pertaining to the development of the auto industry in 2012.
In a nutshell, in 2012 all dealerships in Alabama realized sales worth $9,568 million, according to NADA. The average amount per dealership came to $31,893 (in thousands).
Compared to total retail business in the state, dealer sales had a 15% share. Not bad.
Without going into much detail, the NADA report also states that on a national level, the share of total dealership sales dollars was divided as follows:
- New cars – 56.2%
- Used cars – 31.8%
- Service and parts – 12%
If these statistics sound encouraging enough, perhaps they can help you make up your mind and start selling used cars. To do that, however, you’d need to apply and get an Alabama used car dealer license. Here is how.
The state of Alabama recognizes any enterprise that sells five or more vehicles in any one year period as a car dealer. Retailers sell only to the public and must collect sales tax. Alabama issues separate car dealer licenses in four categories: new or used car dealer, wholesaler, rebuilder, and reconditioner.
Each license consists of two distinct components, and this is a fact you shouldn’t forget:
#1. Regulatory License. No matter which category of dealer you fall under, you’re required to get this license, which is issued by the Alabama Department of Revenue. In order to apply, you fill out an application where you provide all the basic information about your business: tax number, surety bond details, insurance, and so on. You can find some quite helpful instructions on how to fill it out on the Alabama Department of Motor Vehicles’ (DMV) website. The fee is $10. If you’re applying for more than one category of licensing, you’ll have to pay a separate fee for each one.
#2. Business or Privilege License. Keep in mind that in order to apply for this license, you first have to obtain the regulatory one. The application must be filed at your local county probate office. The fee for this license is calculated based on your city’s population. For more information call: 1-334-242-1170.
Before you are granted an Alabama used car dealer license, you’ll have to gather the following documents:
- A correctly filled out application form.
- A surety bond in the amount of $10,000.
- Insurance. A blanket liability insurance is required for all vehicles involved in your business. While applying for a license, you’ll have to submit a current insurance certificate. Make sure your coverage is not canceled and that it’s renewed before the expiration date. Otherwise, you’d risk your not receiving your license.
- Sales tax number issued in the same name as your business.
- Proof of a permanent business location with a land-line phone number.
- Photographs of your business sign and location.
- Coverage of all the required fees.
The Surety Bond
To post an Alabama auto dealer license surety bond is a standard requirement for all car dealers. For used vehicles, the standard amount is $10,000. It’s necessary, because it’s meant to protect consumers from misdeeds on the dealership’s part, should they occur.
The amount for this surety bond is rather small, so your premium will not be high, either, as long as you have a good credit standing.
Usually, the premium will be calculated to be between 1% – 5% of the total bond amount. In case your credit score is below 650, you’ll be considered a high-risk applicant and may be asked to pay between 5% and 15%.
Bryant Surety Bonds offers a bad credit program, so check it out if it applies to your situation. You will get an instant quote and know how much you’d have to pay.
The only two instances when you’d be denied a bond is if you’ve had an open bankruptcy or late child support payments.
Used cars have always been a good alternative for individuals or families on a tight budget. This kind of business will always be around the corner. So if opening a used car dealership’s been on your mind for some time, there’s no better time to go for it. Gather all the necessary paperwork; follow all the guidelines when you are filling out the applications; apply for that Alabama used car dealer license bond, contact Bryant Surety Bond to get a quote or with any questions you may have, and hope for the best. Good luck!