How to Get an Alabama Auto Dealer License

The process of how to get a dealer's license in Alabama is a bit more complex than in other states. 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.

How to get your Auto Dealer License

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Do You Need an Auto Dealer License?

All auto dealers need to be licensed in the State of Alabama (as required by the Code of Alabama 1975). Therefore, if you plan on selling new or used cars, operate as a rebuilder, reconditioner or motor vehicle wholesaler, you need to obtain an Alabama dealer license.

How Much Does an Auto Dealer License Cost?

There are multiple costs associated with the auto dealer license application.

  • Master Dealer License - $125.00
  • Each additional dealership/place of business - $5.00
  • Privilege License - Fee varies based on the population of the city or county in which your business will be located.
  • Alabama auto dealer bond - $500.00 to $5,000.00

Dealer License Plate Costs

  • Dealer plates - $25.00
  • Dealer motorcycle plates - $17.00
  • Manufacturer plates - $25.00
  • Motorcycle manufacturer plates - $17.00

What Type of License Do You Need?

As of October 2020, the four license designations available for Alabama car dealers have been rolled into a Master License due to Alabama House Bill 393. A Master License allows a holder to legally conduct work in the State of Alabama that falls under any of the four previous designations (listed below).

  • 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

How to Apply for an Auto Dealer License

This guide will take you through everything you need to do when applying for an auto dealer license, step by step. It includes updated license requirements, such as the new motor vehicle dealer bond requirements that came into effect October 2020.


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

Note: Only retail dealers selling new and used vehicles need to obtain a sales tax number.

The fastest way to get a sales tax number is to apply online. You can so through the Alabama Department of Revenue or by completing theCombined Registration/Application/Change form.

You will need the following information on hand:

  • Business name, mailing address & phone number
  • A short description of your business
  • Your personal information
  • Payment information

Once complete, it will take approximately 1-2 business days to receive confirmation and other relevant information regarding your sales tax registration.


Obtain Proof of Liability Insurance

You are also required to purchase blanket liability insurance 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 a 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

Any Alabama motor vehicle dealer who fails to maintain a liability insurance policy during licensing may be subject to a penalty of up to $5,000

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.


Obtain Your Auto Dealer Bond

All license applicants and holders must maintain a valid bond to satisfy the designated agent bonding requirement. Note that as of October 2020, the bonding amount has increased for all Alabama motor vehicle dealers. This change is reflected in the information below.

The cost of an Alabama 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.

Bond Amount Required:

  • $50,000 for new motor vehicle dealers, used motor vehicle dealers, motor vehicle rebuilders, or wholesale dealers.

Fill out our online application form to obtain a free bond quote for your auto dealer license. Our free quotes are no obligation, take 5 minutes, and you will be able to lock your rate for the next 90 days (in case you want to purchase the bond).

Completed bond forms should be filed with the Department of Revenue at the following address:

Department of Revenue
Motor Vehicle Division
2545 Taylor Rd
Montgomery, AL 36117

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Obtain Your Regulatory License

Before applying for a privilege license, you must obtain your regulatory license from the Alabama Department of Revenue (ADOR). You can fill out the  through their Motor Vehicle Division License Portal.

The license fee is $10 per category.

Note: You will be asked for your Federal Employee Identification Number (FEIN). If there is no FEIN for your business, you can enter your Social Security Number (SSN).

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.

Make sure to bring all requested documentation with you, just as with the Regulatory License application process.

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