The process of how to get a dealer's license in Alabama is a bit more complex than in other states, but this guide will take you through everything you need to do, step by step. The most important thing to bear in mind is that auto dealers in Alabama must get two licenses: a regulatory license from the Alabama Department of Revenue (ADOR) and a privilege license (business license) from your county’s probate office. Here are the steps you’ll need to get both:
Determine Which Type of Auto Dealer License You Need:
- Retailer: Sell new or used vehicles to the public
- Wholesaler: Buy/sell vehicles at auto auctions
- Rebuilder: Make vehicle repairs to the extent that the car may need a new vehicle identification number (VIN)
- Reconditioner: Refurbish or repair damaged vehicles for resale with the same VIN
Obtain a Permanent Business Location and Business Sign
All dealers (including retailers, wholesalers, rebuilders or reconditioners) must have a permanent business location with a verifiable phone listing. Retail dealers are required to have a permanent sign.
Make sure to take pictures of your business sign and location to include with your license application. For the full requirements, see the Alabama Motor Vehicle Division website.
Obtain a Sales Tax Number (Retail Dealers Only)
Only retail dealers selling new and used vehicles need to obtain a sales tax number.
You can apply online through the Alabama Department of Revenue or complete the Combined Registration/Application/Change form and apply in person or by mailing your application.
Obtain Proof of Liability Insurance
You are also required to purchase coverage for all vehicles connected with your business. Your auto dealer license could be revoked if your coverage is not active or up to date.
As required by the Department of Revenue, you must show proof in the form of an original insurance certificate or legible copy.
The insurance limits must be:
- $25,000 for bodily injury or accident
- $50,000 for combined bodily injury and accident
- $25,000 for property damage or accident
- $75,000 combined single limit for an accident
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 auto dealers are required to maintain a valid bond.
Bond Amount Required:
- $10,000 for Used Car Dealer, Rebuilder and Reconditioner licenses
- $25,000 for New Car Dealer license
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Obtain Your Regulatory License
You must obtain your regulatory license from the Alabama Department of Revenue (ADOR) before applying for a privilege license. Fill out the electronic application following these instructions. The license fee is $10 per category.
Note: You will be asked for your Federal Employee Identification Number (FEIN). You can enter your Social Security Number (SSN), if there is no FEIN for your business.
Complete and submit the online form. You will also need to print and mail in your application and supporting documentation to the Alabama Department of Revenue (dealer license section).
Submit Your Privilege (Business) License Application
The last step is to obtain your privilege license. This license must be obtained from your county’s probate office. For more information, see the Business and License Tax FAQ.
Privilege License Fee: Varies based on the population of the city or county in which your business will be located.Make sure to bring all requested documentation with you, just as with the Regulatory License application process.
