To get licensed as an auto dealer in Delaware, whether a new, used or wholesale dealer, you need to apply at the state Division of Motor Vehicles (DMV). The application process for these licenses is largely the same, with only a few exceptions.
Most applicants will need to register their business in the state, get a license from the Division of Revenue, obtain a Delaware auto dealer bond, and cover several other requirements.
Keep reading for a step-by-step guide on how to get a Delaware dealer license!
Delaware Auto Dealer License Requirements
All types of dealer licenses in Delaware are regulated and issued by the state DMV. Below are all the steps you need to take to obtain your license.
1. Register your business in the state and city
All businesses in Delaware need to be registered. Whether you need to register at the Division of Corporations and the Division of Revenue, or only in the latter will depend on your business type.
See the business guide offered by the Division of Revenue to determine what you need to do, depending on your choice of business.
When applying at the Division of Revenue, you will need to apply for a so-called annual business license. Later you will need to attach a copy of your receipt from the Division to your license application.
The fee for obtaining a business license is $100.
Applicants for a Delaware wholesale dealer license will need two licenses from the Division of Revenue – a motor vehicle license and a wholesale license.
2. Check with the DMV if your business name is available
You will also need to check with the DMV to see if your chosen dealership business name is available. If it is not, you will have to pick another one.
Moreover, you may also have to register with the local Prothonotary’s office if you will be doing business under a different name than the registered name of your business (“doing business as” – DBA).
3. Complete your license application
4. Get a personal criminal history background check
You will need to get a background check from the Delaware State Bureau of Identification in your county and attach it to your application.
The fee for the check is $52.
5. Find a suitable dealership location and obtain permission from your local zoning office
Once you find a location you want to use for your dealership, you will need to contact the city zoning office to receive approval, if your dealership will be located within a city. In case it will be located outside of city limits, you will need to contact the Planning and Zoning Office in your county.
Depending on whether you lease, rent or own the location, you will need to provide proof thereof attached to your application.
6. Get an entrance permit from the Department of Transportation (DOT)
New and used dealers must obtain such a permit if their dealership will be located on а state-maintained road. Contact your county’s Department office to learn more about this requirement.
7. Comply with location requirements
Your dealership location needs to conform to several requirements. These are as follows:
- Have an office space located on the premises of your dealership, with desk and filing cabinet to maintain records, and a display space for at least 5 vehicles
Note: wholesale dealers may operate from a private residence and do not need to comply with this requirement
- Have a sign on the premises of the dealership that measures at least 24”x36” and displays the name of the business
Note: wholesale dealers do not need to comply with this requirement
- Have a telephone installed in their business location and listed in its name
- Have a computer and laser printer for printing on-demand temporary tags
Note: wholesale dealers are not eligible for temporary tags
8. Obtain liability insurance coverage and an auto dealer bond
When submitting your application, you will need to provide proof of having satisfied the insurance coverage requirement. Contact the DMV for more information about the amount of insurance you need, depending on your type of license.
You will also need to provide proof of having obtained a surety bond in an amount of $25,000. The purpose of this bond is to guarantee that you will comply with all legal obligations you have as a dealer.
9. Attach all necessary documents and submit your license application
To recap, you must attach all of the following documents to your application before you submit it to the DMV:
- Receipt from your Division of Revenue business license
- Articles of incorporation from the Division of Corporations (if applicable)
- Criminal history background check
- Lease or rental agreement for your location, or proof of ownership
- Zoning approval
- Entrance permit from Department of Transportation (if applicable)
- Franchise agreement (only for new vehicle dealers)
- Proof of liability insurance
- An auto dealer surety bond
You must submit your application at the local DMV office. Along with your application, you will need to pay a $10 fee per dealer tag. There are no other licensing fees required for dealers in Delaware.
10. Have your location inspected
Once you’ve covered all of the above requirements, you are ready to pass an inspection. Contact your county DMV office to schedule an inspection. After your dealership has been inspected, you will be issued your license.
11. License renewal
Delaware dealer licenses expire yearly on December 31. You can apply for renewal 90 days prior to the expiration of your license.
Upon renewal, you will need to submit a record of the vehicles you have sold in the preceding year. The number of sales you have concluded will determine the number of dealer tags you will be eligible to receive.
If you have any additional questions about your license application or the requirements for dealers in Delaware, see the official Dealer Procedures Manual.
Delaware Auto Dealer Surety Bond Requirement
The surety bond required of auto dealers in Delaware is intended to serve as a guarantee that they will comply with all their legal obligations under state laws.
To get bonded, you need to pay a bond premium which is equal to a percentage of the total bond amount. Your exact premium will depend on your personal credit score and several other financial factors. The higher your score – the cheaper it is to get bonded.
You can apply to get a free quote on your bond by clicking on the banner below and completing the bond form. We’ll then provide you with your quote, and more information.