How to get a dealer license in Alabama

Ala. Code 40-12-390(15) defines a used motor vehicle dealer as any person 'engaged in the business of buying, selling, exchanging, advertising, or negotiating the sale of five or more motor vehicles, not previously titled or registered in the person's name, at retail during a calendar year or in offering or displaying motor vehicles for sale at retail to the public.' Under Ala. Code 40-12-391, no one may act as a new or used dealer, rebuilder or wholesaler without a master dealer license from ALDOR, and new and used dealers also need a state sales tax number.

• New motor vehicle dealer (master dealer license): Dealers with a manufacturer franchise who sell new vehicles. The license also lets them operate as a used dealer, wholesaler and rebuilder.
• Motor vehicle wholesaler: Businesses that buy, sell or exchange vehicles at wholesale to licensed dealers only, not the public. A used dealer's master license also covers this.
• Motor vehicle rebuilder: Businesses that rebuild vehicles so extensively that they need a new identification number, or that repair damaged vehicles to prepare them for resale. A used dealer's master license also covers this.
• Motor vehicle wholesale auction license: Auctions that sell vehicles at wholesale only to licensed dealers, dismantlers and secondary metals recyclers. The fee is $125 a year.
• Automotive dismantler and parts recycler license: Businesses that dismantle vehicles and recycle parts. Only holders of this license, or their agents or employees, may buy at Alabama salvage pools or salvage disposal sales.
• Off-site sales license: Licensed dealers holding a sale away from their permanent location. It costs $25 per event, with up to 3 events a year of up to 10 days each.
• Master off-site sales license (facilitator): The person or business that runs an off-site sale for participating dealers. It costs $25 per event.

Surety bond. A continuous $50,000 surety bond from a surety company authorized in Alabama, payable to ALDOR (Ala. Code 40-12-398; rule 810-5-12-.02). The same bond meets the designated agent bond that every dealer needs. ALDOR provides the bond form only after you apply.

Insurance. Blanket motor vehicle liability insurance on all business vehicles, including inventory (Ala. Code 40-12-392(c)). ALDOR lists minimums of $25,000 bodily injury per person, $50,000 bodily injury per accident and $25,000 property damage per accident, or a $75,000 combined single limit. The insurer verifies coverage electronically or on form MVD-1, and failing to keep coverage can bring a civil penalty of up to $5,000.

Place of business. Ala. Code 40-12-390(12) requires a permanent location: a building that is owned, rented or leased and used as an office to receive mail, keep records and do business, with utilities in the name of the business or owner. Each location must be properly zoned, post its operating days and hours, and have space to display one or more vehicles. The sign must show the licensed name, use letters at least 6 inches high to identify the seller type, and be legible from the street or from 50 yards, whichever is greater. Shared or common space, space rented by the hour or day, cubicles, temporary, virtual or rotating offices, and more than one dealer under one roof do not qualify. You do not have to live in Alabama, but you must meet at least 3 of 9 Alabama presence tests in rule 810-5-12-.01 and send a photo of the location and sign.

Background check. We found no fingerprint or criminal background check requirement in the statute, rule or ALDOR pages. The application must list each owner's, partner's, officer's and director's name, home address, driver license number and Social Security number, with a copy of each person's ID. ALDOR may investigate before it issues a license (Ala. Code 40-12-392(a)).

Pre-license education. Alabama does not require a pre-license course for this license.

1. Get an Alabama state sales tax number, which new and used dealers must have.
2. Set up a permanent, properly zoned location with display space, a sign with 6-inch letters and posted hours.
3. Apply online through Alabama Partner Registration in MyDMV and pay the $125 fee, plus $5 for each extra location.
4. Use the bond form from your application to get a $50,000 surety bond payable to ALDOR.
5. Have your insurer verify blanket liability coverage on form MVD-1 or electronically.
6. Send the documents on your transmittal sheet, including owner IDs and a photo of the location and sign.
7. Print the license after ALDOR emails you, then buy the county privilege license at your county licensing office.
8. Request dealer plates in MyDMV with proof of the privilege license, and complete the online designated agent training.

Official forms:

• Alabama Partner Registration (online master dealer license application)
• Dealer surety bond form (provided only after you apply)
• Insurance certification form (generated by ALDOR's system), MVD-1

No. Every master dealer license, including a wholesaler's, needs a permanent location with space to display at least one vehicle, a sign and posted hours, and shared, virtual or rotating offices do not qualify.

Ala. Code 40-12-446(e) bars a licensed motor vehicle wholesale auction from selling to anyone other than licensed dealers, dismantlers, secondary metals recyclers or holders of an equivalent license from another state. AuctionACCESS (auctionaccess.com), accepted at over 400 auction marketplaces in the US and Canada, limits membership to licensed vehicle dealers and their authorized representatives.

The license runs one year from October 1 and must be renewed every October 1 (Ala. Code 40-12-392(b)). There is a 30-day grace period, after which a penalty of 15% of the license amount applies. ALDOR will not renew a license while penalty assessments for dealer plates are unpaid.

This is general information, not legal advice. Rules and fees change, so confirm the details with the Alabama Department of Revenue (ALDOR), Motor Vehicle Division before you apply. Last verified October 20, 2026.

Planning the business side too? Read how to start a car dealership. Used cars you offer for sale need an FTC Buyers Guide in the window. Selling your own car instead? See how to sell a car in Alabama.