In New York, you’re able to sell your car through online or print ads, and by displaying it for sale at home or at another location. That’s completely legitimate and is a part of vehicle ownership. You may need to get a used car dealer license, however, if:
- You sell 5 or more vehicles in 12 months
- You have 3 or more vehicles displayed for sale on your own property
- You have 3 vehicles displayed concurrently or consecutively at that property in a month
- You purchase vehicles with the intent to resell them
Obtaining a used car dealer license is an involved procedure that requires a significant financial investment. Before you apply for your dealer license, you will need several things already lined up. You’ll need:
- A business name
- A location to display at least vehicles and space to operate your business including basic utilities
- Dealer starter kit such as odometer statements, warranty forms, and a dealer book or registry
- Permanent and visible signage
- Proof of insurance for your business and inventory
- Secure office supplies such as a locking file cabinet and a safe
- Titles for vehicles in stock
- Worker’s Compensation insurance
If you don’t have all of these items or your application will be denied.
Part 1 of 3: Obtain a surety bond
Step 1: Determine how much your bond must be. Used car dealers are required to submit a surety bond for $10,000 to $25,000 depending on their annual sales.
Used car dealers selling 200 vehicles or less in a year must provide a $10,000 surety bond to the DMV.
Used car dealers who sell more than 200 vehicles per year are required to pay a $25,000 surety bond.
A surety bond guarantees that in the event of a dispute, you will make good on your end of the transaction.
Step 2: Apply for a bond. Obtain your bond from a local source for your required amount.
Step 3: Include the bond with your application. The surety bond must be signed and sealed, and submitted with your application along with power of attorney papers made out for your business.
Part 2 of 3: Complete the required paperwork for your dealer license application
Step 1: Fill out an Original Facility Application for a car dealer, Form VS-1D, with the New York DMV.
This forms the basis of your application for a dealer license.
All of your supporting documentation will be filed along with this form.
Step 2: Attach proof of your business name. If you are a corporation or limited liability company (LLC), attach a filing receipt from the NYS Department of State.
If you are an individual or a partnership, file a Business Certificate of Assumed Name with the county clerk where the business is located.
Step 4: Attach copies of driver’s licenses. Include copies for every owner, officer, or member of the company.
Step 5: Attach your tax ID. Supply your valid tax ID number or your NYS Form DTF-17A from the Department of Taxation and Finance Certificate of Authority.
Step 6: Attach your Surety Bond. Don’t forget to include your surety bond and power of attorney papers that you obtained in Method 1.
Step 7: Attach Worker’s Compensation information. If you are going to have employees other than yourself, you need to have proof of Worker’s Compensation Insurance and Disability Insurance to file along with your application.
Employers must obtain Workers’ Compensation insurance by purchasing an insurance policy from a private insurance carrier or the State Insurance Fund.
You will also need a Federal Employer Tax Identification Number (FEIN) to identify your business. Fill out Form SS-4 and mail it to the IRS.
Step 8: Attach proof of ownership. Be sur to include proof that you own the property that you will conduct your dealer business on. You can use use a copy of your deed, mortgage, or tax bill for the property.
If you are renting or leasing, you will need a copy of your lease.
Step 9: Attach proof of dealer starter kit. Include the proof of payment for your dealer starter kit available. The dealer starter kit includes:
- Book of registry
- Bill of sale
- Odometer & disclosure statements
- Used car lemon law warranty
- Buyer’s guide
- NYS retail dealer sign
- Note: All forms must comply with the Regulations for Motor Vehicle Dealers and Transporters.
Step 10: Attach signage receipt. You’ll also need to show a receipt for your sign showing you are a registered car dealer.
Your sign needs to meet these requirements:
- A red background and white lettering
- Measure at least 3 feet wide by 2 feet tall
- Display “REGISTERED (Facility Number) STATE OF NEW YORK MOTOR VEHICLE DEALER” in two inch block lettering, as configured in the example shown in the footnote
- To be permanently mounted and visible at all times from the nearest street or highway
Step 11: Include your application fees. The application fee is $487.50, plus you’ll need to purchase bills of sale, Form MV-50, in increments of $250 per book.
Part 3 of 3: Submit your application for a used car dealer license
Step 1: Mail your application. You must submit your application along with payment to:
NYS DMV Bureau of Consumer & Facility Services Application Unit P.O. Box 2700 Albany, NY 12220-0700
Step 2: Wait to be contacted. Once your application is received, an officer will contact you to arrange an inspection by an Automotive Facilities inspector.
When the inspector arrives, you must have your dealer starter kit available.
The inspector will ensure you have your office in working order including your utilities, office supplies, secure storage, and all your inventory paperwork completed and in order. The officer will also examine your location for:
- Clear barrier from other business that share your location
- A display lot
- A dedicated mailbox
- Locked cabinet or safe
- Heat, electricity, desk, and chairs
The facilities inspector confirms you have an appropriate, permanent sign in place, and makes sure you have the space to store at least three vehicles on site.
Step 3: Wait for approval. After your facility is inspected, wait for your application to be approved.
If there is a problem with your application, you will be contacted by an officer at the NYS DMV to review your application. If you are not accepted your registration fee will be refunded.
Once you are approved for your used car dealers license in the state of New York, you can begin to advertise your business, stock your inventory, and sell cars. You may want to consider hiring a mechanic to inspect all cars that you buy and sell so you know that your product is of the highest quality. Used car dealerships rely heavily on reputation so be diligent in selling only the best used cars you can.