How to get a dealer license in Massachusetts

The state consumer affairs office (OCABR) says anyone who sells more than three cars in a one-year period is considered a dealer and must get a used car dealer license from their municipality. By law, you need a license to engage in the business of buying, selling, exchanging or assembling second hand motor vehicles, or to let property you control be used to sell or display motor vehicles. This also covers motor vehicle auction businesses and leasing or rental companies that sell their vehicles to the public (M.G.L. c. 140 § 57). The used car warranty law says a person who sold more than three used vehicles in the preceding 12 months is in the business of selling used vehicles (c. 90 § 7N¼).

• Class 2 used car dealer license: People whose principal business is buying or selling used vehicles, who buy and display used vehicles for retail sale, or who display vehicles they don't own for a fee or commission. Requires a $25,000 bond and access to repair facilities for warranty repairs.
• Class 2 dealer selling only wholesale: Licensed dealers who sell used vehicles only to other licensed dealers and make no retail sales. For RMV dealer plates they skip the public hours, exterior sign and display area rules, but must file a wholesale affidavit and post office hours.
• Class 1 agent's or seller's license: Franchised dealers whose principal business is selling new vehicles under a written contract with the manufacturer, with used sales incidental. Used vehicles they buy for resale (not trade-ins) follow Class 2 rules.
• Class 3 motor vehicle junk license: Businesses that buy used vehicles to remodel, take apart or rebuild and sell, buy or sell used vehicle parts or tires, or assemble used parts. Requires a hearing with notice to abutters.

Surety bond. Class 2 dealers must keep a $25,000 surety bond from a surety authorized by the Massachusetts insurance department, for the benefit of buyers who suffer losses (M.G.L. c. 140 § 58(c)). The city or town may accept a certificate of deposit or irrevocable letter of credit of the same amount instead. You need a separate bond for each business name and for each city or town where you have a place of business. If the bond is cancelled, you have 10 days to replace it, or the license is revoked and the RMV suspends or revokes your dealer plates.

Insurance. The RMV issues dealer plates only after your insurance agent stamps the Registration Application Card, so you need insurance on the dealer plates. We found no minimum dealer liability limits on RMV pages or in 540 CMR 18.00.

Place of business. The city or town must find that you have a place of business suitable for the purpose, and the license lists all premises (c. 140 § 59). For RMV dealer plates (540 CMR 18.02), the business must be in a permanent building or permanently affixed structure (an office trailer counts) that you own or lease for your exclusive use, at the address on your license. No part of the premises or required records may be in a residence. You need an office of at least 100 square feet with a desk, chairs and filing cabinets, and a separate entrance if you share a building. Retail dealers need a permanently affixed exterior sign, a display area that is not shared with another business unless physically separated, room for buyers to walk between vehicles, and customer parking. Your municipal license must authorize vehicle display at the site. Retail dealers must be open to the public at least 30 hours a week with hours posted outside. Class 2 dealers need access to a repair facility. Check with your city or town for added local rules.

Background check. The city or town licensing authority investigates the application and must be satisfied that you are a proper person to run the business (c. 140 § 59). For dealer plates, the RMV sends your application to the State Police Compliance Unit, which inspects your business site. We found no statewide fingerprint requirement for Class 2 applicants.

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

1. Get a business certificate from your city or town, file corporation papers with the Secretary of the Commonwealth if you incorporate, and get an EIN.
2. Lease or buy a location that meets local zoning and the RMV rules in 540 CMR 18.02: a permanent non-residential building, a 100 square foot office, an exterior sign, posted hours and a display area.
3. Get a $25,000 surety bond, or a certificate of deposit or letter of credit if your city or town allows it, for each business name and each city or town.
4. Arrange access to a repair facility that can handle warranty repairs.
5. Apply for a Class 2 license with your city or town licensing authority (the Police Commissioner in Boston) and pay its fee of up to $200.
6. Register your business with the Department of Revenue as a dealer.
7. Apply to the RMV Section 5 Division for dealer plates with the Application for Dealer Registration (FIV107) and the listed documents, then pass the State Police site inspection.
8. Have your insurance agent stamp the Registration Application Card, return it, and pay the plate fees.

Official forms:

• Application for Dealer Registration (FIV107_0623)
• General Requirements for Dealer Inspection
• RMV Business Partner and Administrator Access Form

Not as a home business. Dealers who sell only wholesale to other licensed dealers do not need a display area, exterior sign or 30 public hours for RMV dealer plates, but they still need a permanent, non-residential business location with a 100 square foot office and at least 6 posted office hours a week.

Dealer-only auctions require a dealer license, and Massachusetts dealers may take vehicles to a recognized automobile auction to sell them (540 CMR 18.02). AuctionACCESS (auctionaccess.com) restricts membership to licensed, credentialed vehicle dealers and their authorized representatives.

The Class 2 license expires on January 1 after it is issued, so you renew it every year with your city or town, which must confirm your bond is in effect. RMV dealer plates also renew every year, and you must give the RMV a copy of your current local license at each renewal (540 CMR 18.02).

This is general information, not legal advice. Rules and fees change, so confirm the details with your city or town licensing authority 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 Massachusetts.