How to get a dealer license in Arizona

You need a used motor vehicle dealer license if you buy, sell, auction or exchange, or offer or try to negotiate the sale or exchange of, 'seven or more used motor vehicles in a continuous twelve month period' (A.R.S. 28-4301(34)). Doing dealer business without a license and an established place of business is a class 1 misdemeanor (A.R.S. 28-4334, 28-4502).

• Used motor vehicle dealer: Sellers of used vehicles to the public who deal in 7 or more used vehicles in a continuous 12-month period. Needs an established place of business.
• New motor vehicle dealer: Dealers selling new vehicles, plus used vehicles taken in trade or bought for resale.
• Wholesale motor vehicle dealer: Sells used vehicles only to licensed dealers. Must be an Arizona resident and keep a place of business where records are kept, but does not need an established place of business.
• Broker: Arranges or helps with vehicle purchases for a fee and is not a dealer, manufacturer, auctioneer or wholesale dealer. The principal place of business cannot be in a residential zone.
• Public consignment auction dealer: Runs live auctions with a licensed auctioneer, selling vehicles for the public on consignment.
• Wholesale motor vehicle auction dealer: Provides auction services only for sales to dealers licensed in Arizona or another jurisdiction, and does not own the vehicles it auctions.
• Automotive recycler: Buys vehicles only to dismantle them and sell the parts, and removes parts for resale from 6 or more vehicles in a calendar year.
• Branch license: Lets a licensed dealer sell from another established place of business in the same county. $50 a year.
• Provisional dealer license: Issued with a dealer license application so the applicant can operate while the criminal records check is pending. $10 application fee.

Surety bond. A.R.S. 28-4362 caps the dealer bond at $100,000 (automotive recyclers need at least $20,000), and ADOT's rules set the amount for each license type. The bond names the State as obligee, can be canceled only on 60 days' notice to ADOT, and covers customers' prepaid title, registration and related fees or taxes the dealer fails to pay and failure to deliver a clear title (A.R.S. 28-4362).

Insurance. The dealer licensing statutes reviewed (A.R.S. 28-4361 and 28-4362) do not list a separate garage liability policy for the license. A dealer that gets dealer plates must comply with Arizona's vehicle insurance and financial responsibility law, A.R.S. Title 28, Chapter 9 (A.R.S. 28-4533).

Place of business. A used dealer must do business from an established place of business. Arizona defines this as a site with room to display two or more vehicles that is used principally for the dealership. For a used dealer it does not have to be a permanent building and may be a vacant lot or part of one, but it cannot be a residence, tent, temporary stand or temporary quarters (A.R.S. 28-4301(7)). You need a permanent sign at the entrance that is legible from 300 feet in daylight (A.R.S. 28-4406), and the license must be displayed at the site (A.R.S. 28-4405). List your business hours on each renewal and give ADOT written notice at least 10 days before changing them (A.R.S. 28-4407). ADOT inspects the site in person or by another method it sets (A.R.S. 28-4364). Unimproved lots in the same county may be used for storage (A.R.S. 28-4334).

Background check. Each applicant, partner or stockholder who owns 20% or more must give a full set of fingerprints for a state and federal criminal records check and pay the Department of Public Safety fee. People checked in the past 5 years, or already licensed, may not need a new check for a later license (A.R.S. 28-4361). ADOT may deny a license for misrepresentation on the application, fraud or an auto-related felony within 10 years, any other felony within 5 years, or a similar license suspended, revoked or canceled within 5 years (A.R.S. 28-4365).

1. Get an Arizona transaction privilege tax (TPT) license. ADOT needs a copy with your application and at each renewal (A.R.S. 28-4362, 28-4405).
2. Set up an established place of business that is not a residence, has room to display at least two vehicles, and has a permanent sign at the entrance legible from 300 feet (A.R.S. 28-4301, 28-4406).
3. Buy a dealer surety bond. A.R.S. 28-4362 caps it at $100,000, and ADOT's rules set the amount for your license type.
4. Have each owner, partner or stockholder with 20% or more submit fingerprints and the Department of Public Safety fee for a criminal records check (A.R.S. 28-4361).
5. Apply to ADOT MVD Dealer Licensing with your business hours, bond, TPT license copy, the $15 filing fee and the $100 annual license fee, or $400 if you have a third-party lender contract (A.R.S. 28-4302, 28-4361, 28-4362).
6. Pass ADOT's investigation and site inspection. ADOT may issue a provisional license, for a $10 application fee, while the criminal records check is pending (A.R.S. 28-4364).
7. Once licensed, display the license at your place of business and apply for a dealer's certificate and dealer plates at $30 per plate (A.R.S. 28-4405, 28-4533).

Not for a used dealer license that sells to the public: you need an established place of business with room to display at least two vehicles, though it can be a vacant lot and cannot be a residence. Wholesale dealers, who sell only to licensed dealers, and brokers do not need an established place of business, but they must keep a place of business for records, and a broker's cannot be zoned residential (A.R.S. 28-4301, 28-4335).

Arizona wholesale motor vehicle auction dealers sell only to dealers licensed in Arizona or another jurisdiction, and they must post a sign saying buyers may not resell in Arizona unless they hold an Arizona dealer license (A.R.S. 28-4301, 28-4423). AuctionACCESS (auctionaccess.com), which credentials buyers for over 400 auction marketplaces, limits membership to licensed vehicle dealers and their authorized representatives.

Licenses renew yearly on staggered continuation dates set by ADOT. To set up those dates, ADOT may issue a license for more or less than 12 months, up to 18 months, with a prorated fee. On or before your continuation date, send the renewal application with your business hours, proof of a current transaction privilege tax license and the $100 continuation fee ($250 with a third-party lender contract). A late renewal adds a penalty equal to the fee (A.R.S. 28-4302, 28-4405, 28-4407). Dealer plates stop being valid at the end of the month the plate fees are due unless the next year's fees are paid (A.R.S. 28-4533).

This is general information, not legal advice. Rules and fees change, so confirm the details with the Arizona Department of Transportation, Motor Vehicle Division, Dealer Licensing before you apply.

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 Arizona.