So you have made the difficult decision to start your auto dealership in Alabama. I am saying “difficult” for no other reasons than the mountain of licenses, regulations and other paperwork you need to tackle beforehand. But, by all means, don’t let that discourage you. You will find that, albeit lengthy, the process is logical and not all that hard to understand. Plus, think of the satisfaction you will derive from having successfully established your own operation. So bear with me while I go through the process of licensing your auto dealer business in Alabama.
Getting started with your auto dealer license in Alabama
I am sure that by now you have tried to look into the matter and maybe came out puzzled as to where to begin. Alabama Code Section 40-12-51 states that a motor vehicle dealer is anyone who possesses and displays for sale at least five vehicles in a period of one year. Assuming you’ve covered that requirement, you can then fall into one of six categories: used car dealers, new car dealers, wholesalers, rebuilders, reconditioners and dismantlers. If you fall into either one of the first two categories, you will also need a sales tax number ahead of the license. License? I meant two.
The first kind of license is a regulatory one, issued by the Alabama Department of Revenue. After you obtain it, you become eligible to apply for the second one. The second license is a business license. You need to obtain it from your local probate office. It’s good from September 30th to October 1st and needs to be renewed annually. So how much will these licenses cost you? The regulatory license costs $10 per category, which means that if you plan on being a retailer only, you will pay $10. If you want to be a re-builder or dismantler of cars as well, that will cost you an additional $20. The business license is a bit different, and how much you pay for it depends on the size of the city you operate in.
How to get your Alabama auto dealer licence
The process of licensing your auto dealership goes through several important steps. After you fill in the application form you need to obtain blanket liability auto insurance, put a sign designating the place of your business and provide a display area for at least one vehicle, as well as one for book keeping purposes. And then we get to the surety bond part. While often confused for insurance, a surety bond is actually quite different. All auto dealers in Alabama are required to get an Alabama auto dealer bond. You may see the bond under many different names – auto dealer bonds, MVD bonds and DMV bonds. But they are all one and the same thing.
An auto dealer bond is there to make sure that your business will be operating in accordance with state regulations and that you will not be unfair to your customers. Used car dealers, rebuilders, and wholesalers all need a $10,000 bond, whereas all new car dealers will have to purchase a $25,000 one. The application process can be done entirely online and you get your quotes and approval instantly. Saving money is easy, as online agencies, representing a large number of sureties, do all the shopping for you. Auto dealer bonds also expire each September 30th, so they need to be obtained a Continuation certificate.
How to get your dealer license with bad credit
In case you have a bad credit score (or no credit history), the State of Alabama might give you a hard time. But that shouldn’t discourage you either. There are ways to obtain an auto dealer bond even with a less than perfect credit score. You fall under the “bad credit” category if you have a credit score of 650 or below, but most people still get bonded by paying a slightly higher fee. The only conditions under which you might be refused a surety bonds are an open bankruptcy (a closed one is fine, though) and a late child support payment.
Launching your dealership
That is almost what licensing an auto dealer business in Alabama is about. After you get bonded, you will need to get a sales tax number (that can also be done online), obtain a permanent address and take photographs of your sign and location, adhering to certain requirements. That’s it. From there on you are ready to launch yourself into the world of business.
Need help getting bonded?
If you still have questions about your auto dealer bond in Alabam, you can always contact us at (866)-450-3412. Our auto dealer bond experts are here to help you. If you are ready to get your car dealer bond or if you simply want a free quote, you can fill out our online application form. It’s easy and you can get your free quote in minutes.