Delaware Auto Dealer License Guide
There are a number of steps you’ll need to go through in order to obtain an auto dealer license in Delaware. This guide will walk you through each of those steps to make it as easy and simply as possible. Remember, dealers in Delaware should submit applications through the Delaware Division of Motor Vehicles. Here’s how to get started.
When Do You Need an Auto Dealer License?
If you sell five or more vehicles in any 12 month period as a retailer.
Determine Which Type of License You Need:
- New Vehicle Dealer: Sell new vehicles after entering into a formal agreement with an auto manufacturer to legally sell its new vehicles; with this license, you are also permitted to sell used vehicles of any make
- Used Vehicle Dealer: Sell any make of used vehicle, but no new vehicles of any kind
- Wholesale Dealer: Sell vehicles directly to other licensed dealers, but not to the general public
- Mobile Home Dealer: Buy/sell new and used mobile homes only
- Vehicle Auction Service: Sell vehicles as a middleman between licensed dealers, without owning the vehicles sold; cannot sell new vehicles, but may process the sale of any make of vehicle
Note: A wholesale license must be obtained before any vehicles can be sold to another dealer for resale.
Submit a Criminal Record Check
In order to start your dealership business, you need to submit a criminal history background check and a signature authorization. These should be attached to your Dealer License Application. Don’t forget that you also need to send one copy of your criminal history background check to the State Bureau of Identification.
Fee: $52.50
Obtain a Permanent Business Location
You are required to have an office space with a telephone listed in the business name. Your lot itself must be large enough to display no fewer than five vehicles. A display sign that clearly shows your approved dealership name (make sure it is available) is also required.
Acquire Zoning Approval and Entrance Permit
The procedures for obtaining an auto dealer license may vary from city to city, as all cities and states have different requirements. However, regardless of your dealership’s location, it must follow the zoning rules for that jurisdiction.
Note: If your business is using a “doing business as” (DBA), you will also need to register with the Prothonotary’s office.
Zoning approval:
- Outside city or town limits – contact the county Planning and Zoning Office: Kent County, Sussex County, New Castle County
- Within city or town limits – contact the office in charge of zoning for written approval (usually at city hall)
Entrance permit:
- You need an entrance permit only if the business is located on a state-maintained road. You must acquire this permit from the Department of Transportation.
Obtain Proof of Liability Insurance Coverage
You are required to submit proof of your liability insurance to the DMV, indicating how many dealer tags are insured.
Auto Dealer Insurance
There are several types of insurance coverages that are recommended for auto dealers, but the recommended coverage will vary based on your business and personal needs.
If you’d like to learn more about all of the insurance coverages available to you, please read our auto dealer insurance guide.
Obtain Your Annual Business License
You must obtain a business license annually from the Division of Revenue. Depending on your business, you may have to submit a Combined Registration Application.
Fee: $100 (wholesalers are required to pay an additional $75)
Obtain Your Auto Dealer Bond
The cost of an auto dealer bond is a small percentage of the total bond amount. The bond cost varies depending on your financial strength, e.g. personal credit. You can also take a look at our most frequently asked surety bond questions.
- Fill out our online application form to obtain a free bond quote for your auto dealer license. It takes 5 minutes and you will be able to lock your rate for the next 90 days (in case you want to purchase the bond).
All dealers who are buy-here, pay-here are required to obtain a bond to get licensed.
Bond Amount Required: $25,000 for a new car dealer license.
Arrange for a Business Location Inspection
Contact the Delaware DMV and arrange for an inspection of your place of business. The fee for each dealer tag is $10. For the first year of business, dealers should provide an estimate of the number of cars to be sold.
Fee: $10 per dealer tag
Submit Your Dealer License Application
Fill out the application form and be sure to read the dealer procedure manual so that you know exactly which documentation you need for your specific type of license.
Submit your application to the DMV at Dover:
Division of Motor Vehicles
Dover Administration Office
303 Transportation Circle
P.O. Box 698
Dover, Delaware 19903
Dover Dealer Section: 302-744-2571
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