How to Get Your Tennessee Auto Dealer License in 6 Steps

To legally sell vehicles in Tennessee, you must obtain a Tennessee motor vehicle dealer license from the Tennessee Motor Vehicle Commission. A license is required if you sell five or more vehicles within a period of 12 months.

Tennessee Dealer License Requirements

To get a Tennessee motor vehicle dealer license, you must meet several key requirements, including:

• Registering your business and obtaining a FEIN
• Securing a compliant commercial location
• Obtaining zoning approval
• Getting a $50,000 surety bond
• Providing $300,000 liability insurance
• Preparing required documents and passing inspection

Below are the main steps to get licensed, from choosing your license type to submitting your application.

1. Choose the License Type That Fits Your Business

The first step is to determine which license type is right for your business:

• Franchise vehicle dealer – Sells new vehicles for a specific brand under a manufacturer or distributor
• Used vehicle dealer – Sells pre-owned motor vehicles
• Franchise motorcycle dealer – Sells new motorcycles under a franchise agreement

These are the most common license types for retail dealerships. Additional license types, such as wholesale or auction dealer licenses, may apply depending on your business model.

2. Register Your Business and Obtain Required Tax IDs

Tennessee dealerships must operate under a recognized business structure such as a sole proprietorship, trust, limited partnership, LLP, LLC, or corporation.

• Sole proprietorships generally do not register with the Tennessee Secretary of State
• Other business entities must file formation documents (articles of organization or corporate charter)
• Out-of-state entities must obtain a Certificate of Authority
• Businesses using an assumed name must register it with the Division of Business Services

You will also need to obtain a Federal Employer Identification Number (FEIN) from the IRS for tax and registration purposes.

3. Establish a Compliant Dealership Location

Your dealership must operate from a permanent commercial location intended primarily for vehicle sales. A residence does not qualify.

The location must:

• Include a dedicated office and display lot used only for the dealership
• Typically accommodate around fifteen vehicles and provide at least three customer parking spaces
• Have a properly surfaced lot (asphalt, concrete, or gravel – not grass or undeveloped land)
• Include at least 288 square feet of office space and a working restroom
• Have a permanent business sign visible from the roadway with letters at least eight inches tall
• Have written zoning approval confirming vehicle sales are allowed
• Maintain business hours of at least 12 hours per week, including 8 hours between Monday and Friday
• Have a working landline phone with the number publicly listed and displayed at the location

If no repair facility is located on-site, you must provide a service agreement with a nearby repair shop.

4. Obtain Insurance and a Surety Bond

You must secure both insurance and a surety bond before applying.

Insurance requirements:

• Minimum $300,000 liability coverage per occurrence
• Must include auto or garage liability coverage
• Policy must list:
  • Tennessee Motor Vehicle Commission as a certificate holder
  • Business name and address
  • Policy number and term

Depending on your business and employees, workers’ compensation insurance may also be required.

Surety bond requirement:

• $50,000 Tennessee auto dealer bond
• Must remain active for the full license term (2 years)

The actual bond cost depends, among several factors, on your credit score:

• Good/excellent credit: typically $500–$1,500
• Lower credit: may be $5,000 or more

5. Gather All Required Documents

Before applying, make sure you have all the required documents ready:

• Permanent business location
• Photos of the office, sign, display lot, restroom, and street view
• Zoning approval letter
• Surety bond
• Proof of liability insurance
• Business formation documents or Certificate of Authority
• Sales & Use Tax Certificate
• Federal Employer Identification Number (FEIN)
• Financial statement (generally showing at least $10,000 in net assets, prepared by a CPA)
• Financial background disclosure forms for owners and stakeholders
• Business license from the city and/or county
• Salesperson licenses (if applicable)
• Franchise agreement (if applying as a franchise dealer)
• Labor rate form (for franchise dealers)
• Floor plan form (inventory financing lenders)
• Service agreement (if no on-site repair facility)
• Conviction records (if applicable)
• License fees ($600, depending on license type)

6. Submit Your Application and Pass Inspection

Submit your completed application and supporting documents through the Department of Commerce and Insurance online portal. You can pay the required fees online or by mailing a check to the Tennessee Motor Vehicle Commission.

Once submitted:

• Your dealership will undergo an on-site inspection
• The Commission will review your application and documents
• Approval is issued only after all requirements are satisfied

After approval, you can expect to receive your license within up to 14 business days.

How Much Does a Tennessee Dealer License Cost?

The total cost of getting a Tennessee dealer license depends on several factors, including your license type and business setup.

• License fee: $600 (set by the Tennessee Motor Vehicle Commission)
• Surety bond: the actual bond cost you pay varies based on credit, typically a small percentage of the $50,000 required bond amount
• Liability insurance: required by the state, with costs varying by provider
• Business registration and local licensing fees: vary depending on your city and county

Renew Your Tennessee Auto Dealer License 

Dealer licenses in Tennessee are renewed every two years and may be processed online. However, approval will not be issued until the required bond and insurance are on file.

A $600 renewal fee applies. If you miss the renewal deadline, Tennessee allows a 90-day grace period, during which a late fee equal to 50% of the renewal fee will be charged.

FAQs

Do you need a separate license for each dealership location in Tennessee?

Yes. Each dealership location must be licensed separately and meet all Tennessee Motor Vehicle Commission requirements, including having its own compliant office, display lot, and signage.

How long does it take to get a Tennessee dealer license?

The process typically takes several weeks from start to finish. Preparing your documents and setting up your business location may take 1 to 3 weeks, while application review and inspection can take an additional 2 to 6 weeks, depending on scheduling and application completeness. Once your application is approved, you can expect to receive your license within up to 14 business days.

What happens if my Tennessee dealer license expires?

If your license expires, you must complete the renewal process before continuing operations. Tennessee allows a 90-day grace period with a late fee, but operating without a valid license may result in penalties.

Who is exempt from needing a Tennessee auto dealer license?

In Tennessee, you typically do not need a dealer license if you are a private individual who sells no more than five vehicles in a year and holds the title to each vehicle in your name.

Can a dealer operate another business at the same location?

Yes, but only under certain conditions. At least 66% of the location must be dedicated to vehicle sales or repair activities, and no more than 33% of the dealership’s total revenue can come from the secondary business.