Are you a prospective Arizona auto dealer? This guide is here to help you get your Arizona dealer license.
As with any new business, opening a dealership in Arizona involves a series of administrative steps. There are considerable expenses involved, as well. Thus, it is wise to get thoroughly acquainted with the licensing process in advance, so that there are no unpleasant surprises along the way.
The first decision you will have to make is what kind of business you would like to set up. In Arizona, there are six kinds of dealer licenses. These are for: new motor vehicle dealers, wholesale motor vehicle dealers and auction dealers, used motor vehicle dealers, automotive recyclers, brokers and public consignment auction dealers. After you choose your trade, you can go on with the license application and documents.
Let’s delve into the details of the licensing process to help you prepare.
The Arizona dealer license
So, how do you go about the licensing process? Your point of reference will be the Dealer Licensing Services of the Arizona Department of Transportation (ADOT). All dealers will have to get an ADOT Motor Vehicle Dealer License; some will also need the Arizona Department of Financial Institutions (AZDFI) Motor Vehicle Dealer License. The AZDFI license is required if over the period of one year you sell three or more vehicles in retail on a non-cash basis. Check out the revised Arizona Transportation Legislation, which is available online, for more details.
You can apply for your ADOT and AZDFI licenses together through an online application form on ADOT’s website. If you already have an ADOT license and you now also need an AZDFI license, then you have to apply directly on AZDFI’s website. The licenses must be renewed annually.
For the ADOT license, you will need to provide:
- proof for an established business location
- background criminal check, including fingerprinting
- proof of your business entity status
- Statement of Personal History
- Authorization to Release Information
- business sign
- insurance policy
- surety bond
The fees involved in the ADOT licensing process include a $100 license fee, a $10 provisional license fee, $15 for application filing, $22 for Criminal Records Check per person and $50 per Branch Office, if applicable. When filing your application initially, you only need to pay the $15 filing fee. The AZDFI fee is $300 for a motor vehicle dealer license and $150 for its renewal.
The Arizona vehicle dealer bond
As you can see, one of the main requirements for obtaining an Arizona auto dealer license is getting an Arizona vehicle dealer bond. To do so, you will pay a bond premium, which is a percentage of the bond amount.
Unlike the insurance you also need for your dealership, the license bond is not a safety net for your business. Instead, it guarantees to your customers that your company will abide by state regulations, thus increasing the credibility and trustworthiness of your business.
The bonding amounts vary among the six different categories of licensed dealerships in Arizona. New and used motor vehicle dealers, as well as public consignment auction dealers, have to get a $100,000 bond. For brokers, wholesale auto action dealers and wholesale motor vehicle dealers, the required bond is $25,000. Finally, automotive recyclers have to get a $20,000 bond.
Ready to roll?
Now that you’ve gone through this detailed explanation of the licensing and bonding process for auto dealers in Arizona, you can safely start your own journey in the business. If you still have any questions regarding bonding, we are here to help. Contact us to get all the answers.