How to Get a Dealer License in Michigan
In Michigan, anyone who buys, sells, or exchanges 5 or more vehicles per year must hold a dealer license issued by the Michigan Department of State (MDOS). The state issues 10 different dealer license classes, covering the different types of dealerships, such as used car dealers, franchise dealers, and wholesale dealers.
If you want to sell used cars, this guide walks you through the requirements, costs, and application process for getting your dealer license in Michigan.
Dealer License Classes in Michigan
Michigan offers ten license classes. The table below describes each class, whether a bond or a car lot is required, and which licenses can be held simultaneously by a dealer.
| Class | License Name | Description | Surety Bond | Display Lot | Compatible With |
|---|---|---|---|---|---|
| A | New Vehicle Dealer | New vehicles sold under a manufacturer franchise agreement | $25,000 | Yes | B, C, E, R |
| B | Used Vehicle Dealer | Used vehicles; sells to the public and to other dealers | $25,000 | Yes | A, C, E, R |
| C | Used Vehicle Parts Dealer | Late-model used parts; acquires whole vehicles for dismantling | No | No | A, B, E, F, W |
| D | Vehicle Broker / Auctioneer | Facilitates vehicle transactions; operates auctions; does not take ownership | $25,000 | No | G only |
| E | Distressed Vehicle Transporter | Buys and transports distressed vehicles for sale to Class C, F, or R dealers only | No | No | A, B, C, F, R, W |
| F | Vehicle Scrap Metal Processor | Processes vehicles into scrap metal by shredding, shearing, or similar means | No | No | C, E, R |
| G | Vehicle Salvage Pool | Stores and displays damaged vehicles for insurance companies; no ownership interest | No | No | D only |
| H | Foreign Salvage Vehicle Dealer | Out-of-state dealer; buys and sells salvage parts at Michigan auctions on a wholesale basis only | No | No | None (standalone) |
| R | Automotive Recycler | Acquires and dismantles vehicles to resell parts; may sell whole salvage vehicles at retail | No | No | A, B, E, F, W |
| W | Wholesale Dealer | Buys and sells used vehicles exclusively to and from other licensed dealers; no public sales | No | No | C, E, R |
There are additional requirements that apply to specific classes. For example, dealer training is required before applying for Class B only, while workers compensation insurance is required for Classes C, R, and H. A pre-license inspection is required for all classes except H, while Class A requires a franchise agreement or affidavit.
For a full breakdown of requirements by class, it’s advisable to see the official Michigan dealer license requirements manual.
How to Get a Used Car Dealer License in Michigan: Step by Step
Step 1: Register Your Business and Get a Sales Tax Number
Form your business entity and register for a Michigan sales tax number through the Michigan Department of Treasury. Your sales tax number must be on file before you apply for your dealer license.
Step 2: Secure a Compliant Business Location
Your established place of business must pass a pre-license inspection before MDOS issues your license. Class A and B dealers must meet all of the following:
- A permanently enclosed building (not a residence, tent, or temporary structure), used exclusively for commercial purposes
- An office of at least 150 square feet with standard office furniture, working utilities, a working restroom, and a working telephone listed in the business name
- A display area of at least 1,300 square feet to accommodate a minimum of 10 vehicles of the type you are licensed to sell, plus at least 650 square feet of customer parking; both must be adequately surfaced and well-lit during business hours
- An exterior sign permanently affixed to the building or land, with letters clearly visible from the roadway
- A registered repair facility on-site, or a written servicing agreement with a registered repair facility within 10 miles
- Minimum posted business hours of 30 hours per week (at least 15 of those hours between 8 a.m. and 5 p.m. Monday through Friday), maintained for at least 48 weeks per year
- Zoning and municipal approval from your local authorities
To confirm your location is zoned for vehicle sales before signing a lease, contact the Business Licensing Section at (888) 767-6424 (1-888-SOS-MICH), [email protected].
Step 3: Obtain Your $25,000 Surety Bond
Class A, B, and D dealers must maintain a $25,000 Michigan auto dealer surety bond. The bond protects your customers against financial losses from fraud, misrepresentation, or other violations in your vehicle transactions. Your bond must remain active for as long as you hold a dealer license.
The starting price of your surety bond is $187 per year with Bryant Surety Bonds (0.75% of the $25,000 bond amount for applicants with good credit history). We work with all credit profiles, including applicants with lower credit scores. For more on what affects your rate, see how surety bond cost is calculated
Apply now for a free online quote. There is no obligation and your rate is locked for 90 days from the date you receive it.
Bryant Surety Bonds is licensed to issue surety bonds in Michigan under license number 0122177.
Step 4: Get Fleet Insurance
Used car dealers, as well as dealers from class A and W must carry a minimum of 20/40/10 Michigan no-fault fleet insurance. Proof must be on an ACORD 25 form indicating coverage for ‘all-owned vehicles’ or ‘any vehicle.’ A copy must be kept in every vehicle that leaves the lot, including during test drives.
Step 5: Complete Dealer Training
Class B applicants must complete a pre-licensing dealer training course within six months before submitting your application. Training is held online on specific dates announced on the MDOS website and requires pre-registration. All licensed Class B dealers must also complete continuous education dealer training within 90 days of receiving their license, and then once every 24 months thereafter.
Step 6: Submit Your Application and Pay the $160 Fee
All dealers must complete and submit the Original Vehicle Dealer License Application (AR-0032) and pay the $160 fee. Used car dealer license applicants need to include the following:
- Fingerprints through IdentoGO
- Copies of Articles of Incorporation or Assumed Name Filing
- Michigan No-Fault Fleet insurance certificate
- An established place of business and a repair facility registration or written servicing agreement
- Zoning and municipal approval
- $25,000 surety bond certificate
- Pre-licensing training completion certificate
As a Class B dealer, you must also designate up to three Secretary of State branch offices for vehicle transaction processing through your e-Services account.
Step 7: Pass the Pre-License Inspection
MDOS will schedule an inspection of your business location before issuing the license. Your location must fully meet all established place of business requirements at the time of inspection. Do not submit your application until your location is ready.
Once You’re Licensed
Business hours: Maintain your posted minimum hours (30 hours per week for Class A and B, 15 hours per week Mon-Fri for Class W) for at least 48 weeks per year. Notify MDOS through e-Services at least 7 days in advance if you need to temporarily reduce hours (up to 4 weeks per year for Class A and B).
Sunday sales: Dealers in counties with a population of 130,000 or more may not buy, sell, trade, or exchange vehicles on Sundays.
Annual renewal: Licenses expire every December 31 and must be renewed in advance. If your license lapses for more than 30 days, you must submit a new application.
Minimum annual transactions: Class A and B dealers must buy or sell at least 5 vehicles in the preceding 12 months to renew. Class W dealers must buy or sell at least 24 vehicles per year.
Dealer plates: Class A and B dealers must purchase a minimum of two dealer plates ($10 each). Plates renew annually at $5 per plate. Class W plates are optional and limited to one plate in the first year.
Can You Get a Dealer License Without a Lot in Michigan?
Yes, with a Class W wholesale dealer license you can buy and sell used vehicles exclusively between licensed dealers, from an office with no display lot.
How Class W differs from Class B:
| Requirement | Class B | Class W (Wholesale) |
|---|---|---|
| Who you can sell to | General public and other licensed dealers | Licensed dealers only |
| Display area | 1,300 sq ft (10 vehicles minimum) | Not required |
| Customer parking | 650 sq ft minimum | Not required |
| Repair facility | Required | Not required |
| Office space | 150 sq ft minimum | 8 x 8 ft minimum |
| Business hours minimum | 30 hours per week | 15 hours per week |
| Dealer plates | Minimum 2 required | Optional |
| Fleet insurance | Required | Required |
| Surety bond | $25,000 required | Not required |
| Advertising | No restrictions | Must disclose license class |
| Annual transaction minimum | 5 vehicles per year | 24 vehicles per year |
How Much Does a Michigan Dealer License Cost?
Below are the costs associated with applying for a used car dealer license (Class B).
| Licensing requirement | Cost |
|---|---|
| Application fee (all classes) | $160 |
| Surety bond (Class A, B, D) | Starts at $187 per year |
| Fleet insurance (Class A, B, W) | Varies by provider |
| Dealer training (Class B) | Varies by provider |
| Dealer plates (min 2) | $10 per plate; $5 per plate at renewal |
All fees are subject to change. Verify current amounts with The Michigan Department of State before submitting your application.
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How to Get Dealer Auction Access in Michigan
There is no separate auction license in Michigan. Your dealer license is your credential for dealer-only wholesale auctions. Both Class B and Class W licenses qualify you to buy and sell at dealer auctions.
Class B dealers can source inventory at dealer-only auctions and sell those vehicles to the general public.
Class W dealers can buy and sell at dealer-only auctions but can only sell to other licensed dealers, not the public. If your goal is to source inventory at auction and flip it to other dealers, Class W is the lower-cost path: no lot and no bond required.
To access dealer auctions after you’re licensed, register directly with each auction using your Michigan dealer license number and proof of insurance.
FAQs
How many vehicles can you sell in Michigan without a dealer license?
You may sell up to 4 motor vehicles per year in Michigan without a dealer license. Selling five or more vehicles in a calendar year triggers the licensing requirement under the Michigan Vehicle Code.
Is dealer training required in Michigan?
Pre-licensing dealer training is required only for Class B (Used Vehicle Dealer) applicants and must be completed within 6 months before the application date. Class A applicants are not required to complete pre-licensing training, though it is available. Class B dealers must also complete continuous education training within 90 days of receiving their license and once every 24 months thereafter.
How long does it take to get a Michigan dealer license?
Applications can take up to 30 days to process. Incomplete applications will delay processing. The timeline also includes the pre-license inspection of your business location, which is scheduled after the application is reviewed.
Can I apply for multiple license classes at once?
Yes. Michigan allows a dealer license to be issued in one or more compatible classes. Not all classes are compatible with each other. Review the compatibility chart above before selecting your classes.
When do dealer plates expire in Michigan?
Dealer plates expire annually on the last day of February and can be renewed for $5 per plate. Only Class A and Class B dealers qualify for dealer plates, with a minimum of two required. Class W dealers may apply for plates, but there is no minimum, and only one plate is initially issued.
Can I get bonded with bad credit?
Yes. Bryant Surety Bonds works with all credit profiles. Applications use a soft credit pull only, which does not affect your credit score. A lower credit score typically results in a higher bond premium rather than a denial.
Can I add a business partner or officer to my Michigan dealer license?
Yes, but it requires MDOS approval. The new person must complete form AR-0069 (Dealer Corporate Officer Change Application) and submit fingerprints through the Live Scan process. Their name is added only after MDOS completes a background investigation.
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