A Step by Step Look into Becoming a Licensed Arizona Motor Vehicle Dealer

Opening a Motor Vehicle Dealership doesn’t have to be a difficult and tedious process.  If the applicant is prepared and informed about the necessary steps to obtain an Arizona Motor Vehicle Dealer license, the process can be very smooth.  If these steps are followed, applicants can greatly ease the application process. 

Step 1: Determine What Arizona Motor Vehicle Dealer License You Need

There are seven different types of licenses one can apply for in the state of Arizona.  They are a new motor vehicle dealer license, a used motor vehicle dealer, a wholesale motor vehicle dealer license, wholesale auto auction dealer license, an auto-broker license, public consignment auction dealer license, and an automotive recycler license.  The Arizona Department of of Transportation provides a set of definitions for the different types of licenses, so it can be easier to determine which license best suits the needs of the applicant.  

A New Motor Vehicle Dealer is someone who buys, sells, exchanges or attempts to negotiate the sale of new or used vehicles that are acquired from a wholesale dealer, franchise or trade-in. New Motor Vehicle Dealers are affiliated with a larger franchise or corporation that provides the new cars.  For example, if an applicant is applying for a license to open a dealership with Toyota, they would need the New Motor Vehicle Dealer license. 

A Wholesale Motor Vehicle Dealer is simply a person who sells used motor vehicles only to those who are also licensed motor vehicle dealers.  In the state of Arizona, they can only sell up to four cars to the public before they must register for a different license.  

A Wholesale Motor Vehicle Auction Dealer is someone who auction cars, but they only auction cars to those who are licensed motor vehicle dealers.  At no point in the process does the Wholesale Motor Vehicle Auction Dealer own, sell or buy the motor vehicles in the auction and normal course of business.

An Auto-broker is someone who, for compensation, can help in the purchasing of a new motor vehicle.  An Auto-broker cannot also be an employee or sales agent for a new or used motor vehicle dealership, or can they be an auto auctioneer or employee/agent of a manufacturer.  

A Public Consignment Auction License is for someone who does live auctions with a licensed auctioneer calling number and bids or who does live auctions on a consignment contract basis at a public consignment auction dealer’s business or other permitted location.  

A Used Motor Vehicle Dealer is someone who is independent of a new motor vehicle dealer, who buys, sells, auctions or exchanges four or more used cars within a year.  The Used motor vehicle dealer is separate from the wholesale motor vehicle dealer and the public consignment auction dealer, so there is no need to obtain two licenses.  

Finally, the Automotive Recycler is someone who acquires cars for the soul purpose of dismantling, selling or recycling the parts of the car.  This only applies to those who dismantle six or more cars in the span of one year. 

Step 2: Get Bonded 

An essential part of applying for an Arizona Motor Vehicle Dealer License is getting bonded.  The Arizona Department of Transportation requires that licensees submit a surety bond in order to be granted a license and be allowed to do business in the state.  A separate bond must be filed for each county the licensee wishes to conduct business in and it must be signed by the individual apply, all partners or a corporate officer.  The required bond amount will vary depending on the type of license the licensee is seeking.  Automotive Recycler licensees are required to obtain a surety bond in the amount of $20,000.  Auto-broker, Wholesale Auto Auction Dealer and Wholesale Motor Vehicle Dealer licensees must post a $25,000 surety bond.  New Motor Vehicle Dealer, Used Motor Vehicle Dealer and Public Consignment Auction Dealer licensees must post a $100,000 surety bond.  The Arizona Motor Vehicle Dealer Surety Bond helps ensure that customers and the state are protected from your company financially harming them.  

To view a copy of the Arizona Motor Vehicle Dealer Surety Bond form, you can click here.

Step 3: Background Check

Arizona Motor Vehicle Dealer applicants and partners who own more than 20% of the company seeking a new license need to submit to a criminal background check.  Having a criminal record or prior convictions does not automatically deny you license.  However, it will automatically deny those who have been convicted of fraud or an auto related felony in the last year 10 years. The background check looks into your personal history to help ensure that licensees, their partners or corporations will run their business responsibly and ethically.  While this check can be strict, legal appeals can be made if you are denied a license because of the background check.  Along with the background check, applicants need to submit a fingerprint card.  The Department of Transportation requires the fingerprint card so that your fingerprints are on file with the state.  Fingerprint cards can usually be done by local police or county sheriffs for a fee.  Click here to view a current list of all agencies in Arizona that will do a fingerprint card. 

Step 4: Gather Required Fees and Forms

To apply to become an Arizona Motor Vehicle Dealer, there are a number of additional fees and forms that need to be completed in conjunction with the license application. The motor vehicle dealer application form is pretty straightforward, and you can find the other necessary forms and more information about it HERE.  The fees that are needed for this application are a $15 filing fee, $22 criminal background check fee (must be paid for every person that gets one), $100 for the provisional license, $100 to get the license, and $50 per branch (if necessary). 

Step 5: Submit Your Arizona Motor Vehicle Dealer License Application

Once you have completed all of these steps, you are ready to submit your Arizona Motor Vehicle Dealer License Application to the Department of Transportation!