Your Step-by-Step Guide to Getting an Arkansas Auto Dealer License

When you decide to open a dealership in Arkansas, you can choose between several types of dealer licenses – a new, used, or wholesale dealer license. These licenses are issued by two different licensing agencies – the Arkansas State Police (ASP) for used and wholesale licenses, and the Arkansas Motor Vehicle Commission (AMVC) for new dealer licenses.

To get either of these licenses, you need to complete several licensing requirements. These include business registration, securing a business location, obtaining an auto dealer surety bond, and a few others.

Keep reading for a full overview of the steps you need to take to get an auto dealer license in Arkansas!

Arkansas auto dealer pre-licensing requirements

Prior to applying for a license, you need to cover several business prerequisites. These are as follows:

1. Register your business with the Secretary of State
2. Apply for an Employer Identification Number (EIN) from the IRS (if applicable)
3. Register with the Arkansas Department of Finance and Administration (DFA) to obtain a sales tax identification number
4. Obtain Workers’ Compensation Insurance (if applicable)

After you have completed these requirements, you can move on to applying for your dealer license.

Download our FREE ebook guide to learn all the major requirements for becoming a licensed and bonded car dealer in Arkansas!

Arkansas dealer license application

Depending on the license you need, you will have to apply at one of the following authorities.

• For a new (franchise) dealer license, you will need to apply at the Arkansas Motor Vehicle Commission
• For a used or wholesale dealer license, you will need to apply at the Arkansas State Police

The licensing process differs somewhat between these different types of dealers though requirements are identical. Here’s how to apply.

Secure a location and comply with facility requirements

Regardless of what type of license you are applying for, you will need to secure a location that complies with local zoning ordinances. Contact your zoning office to establish what you need to do. Once you have secured your location, you must make sure it complies with the requirements for the license type you are applying for.

• Used and wholesale dealers must mainly have a “bona fide established place of business” identified by a sign, and a filing cabinet on premises.
• New dealers must have an established place of business, signage, a display area, and even a service and parts area.

Get liability insurance and an auto dealer bond

All dealers must obtain liability insurance with a coverage of at least $75,000.

Additionally, applicants also require a surety bond.

• New dealer license applicants must obtain a $50,000 bond for their main location and a $25,000 bond for every additional location.
• Used and wholesale dealer license applicants must obtain a $25,000 surety bond for a single location or a $100,000 bond if they want to license multiple locations.

Complete the dealer application packet

Applicants also need to complete a dealer license application form which differs depending on the license type.

Applicants for a new dealer license must complete the Initial auto dealer application packet, and the Initial dealer salesperson application (if required).

Applicants for a used and wholesale dealer license must complete the Used motor vehicle dealer application, and the Additional employee form (if required).

In addition to your license application, you will also need to attach several documents which are clearly described in the application packets. These include photographs of your location, proof of insurance and an auto dealer bond, and more.

Once you have completed the forms, you will need to submit your application to the licensing authority you are applying with and pay fees.

• Applicants for a new dealer license must pay a $100 license fee, and a $25 fee for every branch location, as well as a $15 fee for every salesperson.
• Used and wholesale applicants must pay a $250 license fee for their main location, and an additional $125 fee for every branch location. After you have submitted your application and paid the fee, you will be contacted by an ASP inspector to schedule a time at which your dealership can be inspected.

License renewal

All dealer licenses expire yearly on December 31 and must be renewed before that date. Both the ASP and AMVC offer license renewal forms with instructions on their websites.

Arkansas auto dealer bond requirement

All dealers need to obtain a surety bond as part of their application process. The bond serves the purpose of guaranteeing that the dealer will comply with the provisions of the Arkansas Motor Vehicle Commission Act.

Regardless of the type of license, you are applying for, the amount of the bond you need to post is not the same as its cost. The bond amount is the total amount of compensation that the state requires you to secure in case you violate the law.

The cost of getting your bond, i.e. of securing this compensation, is much lower than the amount of the bond. The bond cost, or premium, is equal to a small percentage of the total amount.

This percentage is determined by the surety on the basis of your personal credit score. If you have a high credit score, you can expect to be offered a rate on your bond between 1% and 3% of the total amount.

Estimate your surety bond cost with our free surety bond cost calculator.

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