How to get a dealer license in Iowa

Iowa Code 322.3 bars anyone from engaging in the business of selling new or used motor vehicles at retail, or advertising that they do, without a dealer license from the Iowa DOT. Under Iowa Code 322.2(8), 'engaged in the business' means acquiring, selling, exchanging, holding, offering, displaying, brokering, accepting on consignment, conducting a retail auction, advertising any of these, or acting as an agent for them, for the purpose of retail sale. A person selling more than six motor vehicles at retail in a twelve-month period may be presumed to be engaged in the business. Banks, credit unions and trust companies in Iowa do not need a license (Iowa Code 322.15), and the state, counties, cities and other governmental subdivisions do not need one to sell their own vehicles (IAC 761-425.9).

• New motor vehicle dealer: Dealers who sell new vehicles under a written franchise with the manufacturer or distributor of each make. The display area must be inside a building.
• Used motor vehicle dealer: Dealers who sell used vehicles at retail. An owner or officer must complete the 8-hour pre-licensing class, and the display area may be outdoors on an all-weather surface.
• Restricted dealer: Businesses that sell only through lease purchase options, repossessions, fleet sales, public auctions or insurance settlements. No place of business is required, but restricted dealers get no dealer plates or extension lots.
• Towable recreational vehicle dealer: Dealers of travel trailers and other towable recreational vehicles. The bond is also $75,000, and no physical inspection of the site is required.
• Motor vehicle leasing license: Companies that lease vehicles for longer than 60 days. It needs a separate application.
• Vehicle recycler (rebuilder, used parts dealer or salvager): Businesses that dismantle, salvage or rebuild more than six vehicles in 12 months, or sell parts from them. The fee is $70, and this license does not allow retail vehicle sales.
• Manufacturer, distributor or new vehicle wholesaler: Manufacturers and distributors that supply Iowa dealers, and wholesalers who sell new vehicles to dealers only.
• Special equipment wholesaler: Businesses that install cranes, buckets, tanks or similar equipment on new trucks of 14,500 lbs GVWR or more and wholesale those trucks. The fee is $40.
• Extension lot license: Extra lots owned or leased by a licensed dealer that are not adjacent to the principal place of business. Apply on Form 417072.

Surety bond. A $75,000 corporate surety bond running to the State of Iowa, from a surety licensed in Iowa, must be filed with the DOT before the license is issued (Iowa Code 322.4(1)(g)). It protects buyers against losses from the dealer's failure to deliver a valid title or to follow odometer law. The bond must require 30 days' notice to the DOT before cancellation, and the original is kept with the dealer's records (IAC 761-425.4). A dealer already licensed as a towable recreational vehicle dealer under the same name and principal place of business does not file a second bond.

Insurance. Iowa Code 322.4(1)(h) requires financial liability coverage of at least $100,000 for bodily injury or death of one person, $300,000 for bodily injury or death of two or more people in one accident, and $50,000 for property damage. The applicant certifies the coverage on the application and must keep it in force with no lapse while licensed (IAC 761-425.4).

Place of business. A DOT representative inspects the principal place of business before the license is issued (IAC 761-425.4(2)). It needs an office with a working business telephone and space for records, staffed during at least 32 posted hours between 7 a.m. and 9 p.m., Monday through Friday. Dealers selling only motorcycles are exempt from the hours rule. It needs a repair facility inside a building, separated from the display and office areas by floor-to-ceiling walls and full-length doors, with an open area of at least 14 by 24 feet (10 by 15 feet for motorcycles). It needs a display area of at least 18 by 30 feet (10 by 15 feet for motorcycles) inside a building. Used dealers and dealers selling only new trucks or motor homes may use an outdoor all-weather surface instead, which does not include grass or exposed soil. The applicant must provide a zoning letter from the local zoning office. A separate license is needed for each city or township, extension lots must be licensed, and no license is issued at an existing licensee's principal place of business.

Background check. Iowa Code 322.4(1)(e) requires the application to include a statement of the previous history, record and association of the applicant, and of each partner or each officer and director, enough to establish business reputation. The DOT may deny a license for bad business repute or for a conviction of a fraudulent practice or indictable offense connected with selling motor vehicles (Iowa Code 322.6). The DOT pages reviewed do not describe a separate fingerprint or criminal record check.

Pre-license education. Required (8 hours). Approved courses and details.

1. Set up a place of business with a staffed office, a business phone, at least 32 posted hours a week, an indoor repair area of at least 14 by 24 feet and a display area of at least 18 by 30 feet.
2. Get a letter from the local zoning office stating that the location complies with zoning.
3. For a used dealer license, have an owner or officer complete the 8-hour pre-licensing class before you apply.
4. Buy a $75,000 surety bond from an Iowa-licensed surety on Form 417064, and arrange liability coverage of at least $100,000, $300,000 and $50,000.
5. Complete the dealer license application (Form 417008) and the fee form (Form 417009). New vehicle dealers attach a franchise for each make.
6. Contact the Bureau of Investigation and Identity Protection to schedule the on-site inspection.
7. Mail the application, bond, zoning letter and fees to Iowa DOT, P.O. Box 9278, Des Moines, IA 50306-9278.

Official forms:

• Application for Motor Vehicle or Towable Recreational Vehicle Dealer License (417008)
• Fees for Dealer License Application (417009)
• Bond for Motor Vehicle Dealer and/or Towable Recreational Vehicle Dealer (417064)
• Extension lot license application (number from IAC 761-425.8), 417072
• Dealer and Recycler License Renewal Information (2026)

Not for a regular dealer license. New and used motor vehicle dealers need an office, an indoor repair area and a display area of at least 18 by 30 feet, which used dealers may put outdoors on an all-weather surface. Iowa's restricted dealer license, for businesses that only sell through lease purchase options, repossessions, fleet sales, auctions or insurance settlements, does not require a place of business under Iowa Code chapter 322. A restricted dealer still needs an Iowa business location and cannot get dealer plates or extension lots.

Iowa's dealer pages do not say who may buy at dealer-only auctions. Iowa Code 322.7A refers to wholesale dealer-only auction companies, and IAC 761-425.9 offers a restricted 'auction only' license for businesses selling more than six vehicles in 12 months only at public auctions. AuctionACCESS, which credentials buyers at over 400 auction marketplaces in North America, limits membership to licensed vehicle dealers and their authorized representatives.

Dealer licenses run for two years and expire December 31 of even-numbered years (Iowa Code 322.7). Current licenses and dealer plates expire December 31, 2026, and renewed licenses run through December 31, 2028. Renewal letters go out at the end of September, and dealers can renew online through the Iowa DOT ARTS dealer renewal system or on paper. Iowa Code 322.7 allows renewal in the month the license expires or the month after. After that, a new application is required. The DOT says dealer privileges lapse if the renewal has not been received by the last day of the month the license expires. A used dealer cannot renew until an owner or officer completes 5 hours of continuing education over the two years, unless they took the 8-hour class in the past 24 months.

This is general information, not legal advice. Rules and fees change, so confirm the details with the Iowa Department of Transportation, 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 Iowa.