The Full Guide to Getting an Iowa Auto Dealer License

Anyone in Iowa who plans to sell more than six vehicles within a 12-month period is required to obtain an auto dealer license, which is issued by the Motor Vehicle Division of the Iowa Department of Transportation (DOT).

To help you navigate the application process and stay compliant with state regulations, we’ve put together a step-by-step guide on how to apply for an Iowa auto dealer license. Let’s walk through what you need to know.

1. Determine Your License Type

The first step is determining which type of license best fits your business activities. Fortunately, the Iowa car dealer license requirements for the different types are identical, so you need to simply check the type of vehicles you’ll be selling on your application form. 

However, if you intend to operate as a rebuilder, manufacturer, wholesaler, or mobile home retailer, you’ll need to follow a different licensing process.

Iowa also offers a restricted dealer license for businesses engaged in specific, limited sales, such as lease buyouts, repossessed vehicles, fleet or auction-only sales, or insurance-related disposals. The eligibility criteria and application requirements for this license differ from those of the standard one.

Additionally, if your business involves leasing vehicles for more than 60 days, you must apply for a separate motor vehicle leasing license.

2. Prepare Your Place of Business 

Along with your license application, you must submit a zoning letter issued by the local zoning authority, confirming that your business location complies with all applicable regulations.

The zoning requirements include:

• Business Hours: Open and staffed at least 32 hours per week, Monday through Friday. Motorcycle-only dealers are exempt from this requirement.
• Office: Must have a landline telephone listed in the dealership’s name and answered during business hours.
• Repair Facility: Мust be separated from the office, sales, and display areas by floor-to-ceiling walls and solid doors. Space and equipment must also be available to repair and recondition at least one vehicle.
  • Minimum repair area for motorcycles/motorized bicycles – 10 ft x 15 ft.
  • Minimum repair area for other vehicles – 14 ft x 24 ft.
• Display Area: New vehicle dealers must have an indoor area where vehicles can be viewed. Used vehicle dealers (and those selling only new trucks or motorhomes) can have an indoor or outdoor area with an all-weather surface (no grass or exposed soil).
  • Minimum display area for motorcycles/motorized bicycles – 10 ft x 15 ft.
  • Minimum display area for other vehicles – 18 ft x 30 ft.

3. Register Your Dealership

Before applying for your Iowa car dealer license, you must officially register your dealership and ensure it meets all state requirements for business incorporation.

Start by obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Once you have your EIN, you can apply for an Iowa business permit through the Online Business Permit Registration system or by submitting a paper application if preferred.

Upon completing your registration, you will receive a unique account number, which is required for tax reporting and remittance.

4. Pass the Vehicle Dealer Education Class (for Used-only Dealers)

All applicants for a used motor vehicle dealer license must complete an 8-hour auto dealer pre-licensing education class before submitting their application. This course is administered by the Iowa Independent Automobile Dealers Association (IIADA). 

At least one individual involved with the dealership, such as an owner, principal, corporate officer, director, member, or partner in an LLC or LLP, must complete the course.

For license renewal, a 5-hour continuing education course is required within 24 months of the renewal date.

Courses are held at Des Moines Area Community College, and the attendance fee is $229. You can find more information on course dates and registration here.

5. Secure a Financial Liability Insurance

Before you can legally run your dealership in Iowa, you’ll also need to secure financial liability insurance.

Your policy must provide minimum liability coverage of:

• $100,000 for bodily injury to or death of one person
• $300,000 fоr bodily injury to or death of two or more persons
• $50,000 for property damage or destruction

This coverage is essential for protecting your business against financial losses resulting from accidents, injuries, or property damage that may occur during regular business operations.

6. Obtain a Surety Bond

Before submitting your application for a car dealer license in Iowa, you must also obtain a $75,000 surety bond, as mandated by state law. This bond acts as a safeguard for customers in the event of contract violations, fraud, or failure by the dealer to meet legal obligations.

Fortunately, securing a bond is a quick and straightforward process. Many surety companies provide competitive rates, free quotes, and convenient online applications.

7. Pass On-site Inspection

Before submitting your application materials, your dealership must undergo an on-site inspection conducted by an agent from the Bureau of Investigation and Identity Protection (BIIP). 

Make sure your facility fully complies with all “place of business” requirements before scheduling the audit. After the visit, the BIIP agent will forward the necessary documentation to Vehicle Central Programs for processing with your application.

To arrange your inspection, you can contact the Bureau at [email protected] or call the designated phone number for your county.

8. Prepare and submit the application

Once you’ve met all the requirements outlined above, the final step is to download, complete, and submit the Iowa dealer license application form.

Along with your application, you’ll need to include the following supporting documents:

• Zoning letter
• Applicable fees
• Certificate of liability insurance
• $75,000 auto dealer surety bond
• Franchise agreement (if selling new vehicles)
• Certificate of attendance from the pre-licensing education course

Additionally, you must complete the Criminal History Data Report section at the end of the form.

After assembling your full application package, mail it to:

Customer Services Bureau
Iowa Department of Transportation
P.O. Box 9278
Des Moines, IA 50306-9278

Breaking Down the Fees for the Iowa Dealer License

Getting licensed as a vehicle dealer involves some fees. While they are straightforward, knowing what each covers will help you plan your budget and ensure compliance from day one.

Below is a breakdown of the fees associated with obtaining an auto dealer license in Iowa. They can also be found in the official Fees for Dealer License Application.

• Dealer License: $70
• Registration Fee: $70 (required if you’re ordering dealer plates)
• Dealer Plates: $40 per plate (available in two sizes: large and small)
• Replacement Plates: $5 per plate ($8 if you cannot provide registration)
• Haul and Tow Plates: $750 (for dealers transporting vehicles using tow trucks or similar equipment)
• Extension Lot Fee: $20 per supplementary lot

If you plan to sell towable RVs, such as campers, trailers, or other non-motorized recreational vehicles, the fees remain the same. You simply need to check the boxes on the application form that apply to your situation.

Note: While you’re not required to purchase dealer plates to become a registered dealer, these plates offer benefits. They can be used for test drives, transporting vehicles to and from your lot, and displaying inventory vehicles. 

On the other hand, unregistered dealers are not eligible for these plates or the associated privileges.

Recent Changes Iowa Auto Dealers Need to Know

• New Look for Dealer Plates (Effective January 1, 2025)

Iowa has introduced a redesigned dealer plate. All previously issued plates expired on December 31, 2024. To ensure a smooth transition, dealers were instructed to submit their renewal applications by December 1, allowing sufficient time to receive the updated plates before the new year.

• Fee Adjustments for Registration and Titling (Effective January 1, 2025)

In May 2024, a new state law was enacted introducing changes to vehicle registration and titling fees in Iowa. The registration fee remains at 5% of the purchase price, with an added $10 fee. The title fee increases from $25 to $35, and the dealer title fee rises from $10 to $20. These adjustments are part of broader efforts to streamline the registration and titling process.

• Changes to Vehicle Titling Procedures (Effective January 1, 2025)

The new state law also allows the transfer of motor vehicle titles to be registered in any county, rather than being restricted to the county where the new owner resides. This change aims to provide greater flexibility to customers and dealers alike. 

Frequently Asked Questions

Who needs a dealer’s license?

In Iowa, you must obtain a dealer license if you’re engaged in activities like acquiring, selling, offering, or brokering motor vehicles to the public. Selling more than six vehicles in 12 months is typically considered “engaged in the business.” Exceptions apply to banks and credit unions, which may sell vehicles without a license. However, limited-use dealer plates can be issued for demonstrations. Repossessed new vehicles may also be resold as new.

Can I expect audits after I become a licensed dealer?

Yes. The Bureau of Investigation & Identity Protection may conduct random audits of licensed dealers and recyclers to ensure they’re following Iowa laws and regulations. These audits typically review title paperwork, disclosures, and sales receipts for both current inventory and past transactions. If issues are found, the consequences can include warnings, administrative penalties, or even criminal charges.

When do I need to renew my license?

Iowa dealer licenses expire on December 31 of even-numbered years, regardless of when they are issued. If you apply early in an even-numbered year, your initial license will be valid only until that December. After renewal, it will then be valid for a full two-year cycle. To avoid losing dealer privileges, your renewal must be received by December 31 of the year your license expires.