An auto dealership can be a very lucrative business when set up correctly. If you’re considering starting your own car dealership, there are certain requirements that you’re going to need to meet in the state of Louisiana. One of the most critical requirements is obtaining a dealer license that gives you the authority to operate within the state.
Determine the Type of Louisiana Dealer License You Need
The first step in obtaining an auto dealer license is deciding on the type of license you need. In the state of Louisiana, there are two main types of licenses that you can obtain. These include a used car dealer license and a new car dealer license.
Used Car Dealer License
If you just plan on selling used vehicles at your dealership, there are specific types of licensing that fall under this category. Each one of these licenses needs to be obtained from the Louisiana Used Motor Vehicle Commission. These include:
- Dismantling of vehicles/recycling parts
- Crushing vehicles
- Selling auction vehicles
- Offering daily vehicle rentals
- Used car dealership
- Offering rentals that the customer can opt to purchase
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New Car Dealer License
If you plan on selling new vehicles at your dealership, then you’ll need to obtain an official license of operation from the Louisiana Motor Vehicle Commission. You can obtain this license via an online application at the commission’s website. There are various licenses that fall under the broad category of new car dealer licensing. These include:
- New motor vehicle dealership
- Franchise for vehicle lessor
- Repair center for satellite warranties
- Facilitator of leases
- Vehicle distributor / manufacturer
- Lessor of vehicles
- Finance companies (under Motor Vehicle Sales Finance Act)
- Brokers of new cars
- Dealers of specialty cars
- Secondary / converter manufacturers
Just as with obtaining a used car dealer license, there are various requirements that you’ll need to meet for each different type of new dealer car license. You can get specific information about your state laws and individual requirements by visiting the Louisiana Motor Vehicle Commission.
Louisiana Dealer License Requirements
You’ll have to meet various licensing requirements to obtain any of these licenses. While the requirements will vary depending on the specific license that you want to obtain, there are some basic requirements that almost all license types require. Items you will need include:
- Verification of zoning
- Active landline at business location
- Picture of your business sign
- Active liability insurance policy
- Completion of a training course
- Insurance for rental cars
- Fully completed application~
- Surety bond
Obtain a Permanent Business Location
One of the very first requirements that you’re going to have to meet before you’re able to obtain an auto dealer license is having a permanent business location established. It doesn’t matter whether you actually own or lease your business location. It just needs to meet some basic requirements, like a certain amount of square feet, in order to obtain a car dealer license.
It is a requirement that all of your books and records must be kept at the location where you conduct your business. You must have a landline phone installed and publicly listed. Lastly, you’ll need to have a permanently fixed sign with your exact business name. You can obtain your legal business name from the Secretary of State. The sign must meet minimum standards of four feet by four feet in size, and a picture of it must be supplied along with your license application.
It’s also important to note that you’ll need to show proof that your business meets all zoning requirements for your local area. You can obtain what the local requirements are by visiting local agencies and speaking with your local DMV.
Gather the Required Documents
As part of your application process, you’ll need to supply various documents to obtain your Louisiana auto dealer license. An imperative part of Louisiana dealer license requirements is that you must have educational training. This training course must be attended by at least one owner, office manager, general manager, salesperson, or title clerk from your company. You’ll need to show proof of your completion of this dealer training as part of your required documents.
Get Your Criminal Background Check
Another necessary part of your dealer license application is consenting to a criminal background check. A background check is performed on the owner of each company to help verify their personal integrity and is a clear indicator of how ethical the business is.
Obtain a Trader’s License & Proof of Liability Insurance
One essential part of acquiring your motor vehicle dealer license application is to have liability insurance. You must show proof of an active policy as part of your application process. Your trader’s liability insurance must have a minimum coverage of $55,000. Most insurance companies will provide you with a free quote. You can compare and contrast policies to determine which one is the best fit for your new business.
Get Your Louisiana Auto Dealer Bond
As you attempt to obtain a Louisiana auto dealer bond, you also need to provide proof of an auto dealer bond. As you get various bond quotes, you’ll realize that the bond cost will vary depending on the specific bond companies you contact. Typically, you’ll need to pay a small percentage of the total bond amount required.
You’ll need to obtain a minimum motor vehicle dealer bond amount of $20,000 if you plan on selling 119 units or less per year. If you plan on selling 120 units or more over a year’s time, you’ll need to have a $35,000 bond amount.
Some factors that will influence your bond amount include your personal credit and the financial strength of your business. If you have a poor credit score, you may find it a bit more challenging to obtain a license bond. However, there are bad credit surety bond companies out there that can assist you in obtaining this legal requirement.
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Submit Your Dealer License Application
Once you’ve gathered all the necessary documents for your application process, it’s time to submit your application form. You’ll need to pay various licensing fees to obtain your license. When you’re first establishing yourself as a Louisiana auto dealer, you’ll need to pay a $400 licensing fee. Each license for a used auto dealership will last for a period of two full years.
Also, you’ll need to submit $35 for a criminal background check. When submitting your application, you’ll need to supply application forms for each of your salespeople.
Renew Your License Every Two Years
You’ll need to renew your licensing every two years when you’re an official vehicle dealer or wholesale dealer for used cars. You can easily do this by submitting a dealer renewal application form alongside all renewal requirements through the Louisiana Used Motor Vehicle Commission’s Online Licensing System. The renewal fee for each dealer license is $400. If you do not submit your renewal by December 31st, you’ll have to pay an additional $100 late fee. Each salesperson will cost $25 every two years to maintain licensing.
Do I Need a Sales Tax Number?
Sales tax numbers are obtained through the Louisiana Department of Revenue. For most of those who are establishing a business, you’ll need to go through the sales tax registration process to comply with state laws regarding sales tax. A sole proprietorship is the only type of business that does not have to obtain this sales tax number. You may also hear this number referred to as a federal tax identification number or EIN, as it’s used by the IRS to help identify your company for tax purposes.
How Much Does It Cost to Get a Dealer License in Louisiana?
The fee to obtain a dealer license starts at $400 for the business itself. You also need to take into account the $25 fee per salesperson at your business. Apart from these specific licensing fees, you’re also going to have to pay for various other requirements like your surety bond, training seminar, inventory, liability insurance, background check, and facility features.
How Many Cars Can I Sell in Louisiana Without a License?
Like most other states, the Louisiana Department of Motor Vehicles (DMV) requires you to obtain a Louisiana motor vehicle dealer license if you plan on selling more than four vehicles per year. This means that the average citizen is allowed to sell up to four vehicles in a 12-month period. This assumes that all the vehicles are registered in their name.
Can I Get a Louisiana Auto Dealer License Without a Lot?
To obtain your dealer license to be a distributor of motor vehicles from auctions or other types of vehicle sales, you’ll need to have an established place of business. This is part of the application process, and you won’t be approved without one. It’s also important to know that there are some basic requirements that your dealer lot must have, such as a visible permanent sign and a business landline.
How Long Does Licensing Take?
If you’ve decided that you want to set up a used car dealership, you’ll likely want to know how long it’s going to take before you can get your hands on your license. Most licenses will take about 14 business days to process from the day that you submit your application. It’s important to note that you should double-check your application packet before submission to ensure that you have all the required documents and that you’ve paid all the necessary fees. Any missing documents or unpaid fees will prevent your licensing application from being accepted.