A Quick and Easy Guide to Getting a Car Dealer License in Maryland

Table of Contents

What is a Car Dealership License?

A car dealer license in Maryland is required for individuals or businesses looking to buy, sell, or trade in vehicles. This license is issued by the Maryland Motor Vehicle Administration (MVA) and serves to regulate the automotive industry in the state.

To obtain a car dealer license in Maryland, applicants must meet certain requirements. These requirements may include obtaining a business registration letter, submitting proof of liability insurance and compensation, obtaining a bond from a qualified bail bond company, and demonstrating compliance with zoning requirements.

The process of applying for a car dealer license in Maryland involves submitting an online application, paying the required license fees, and providing documentation such as a certificate of title for the dealership location.

Why do I need a dealer license?

Obtaining a dealer license is necessary for a number of reasons. Like in the state of Texas, it allows individuals or businesses to legally sell cars in the state of Maryland. Without a dealership license, the sale of vehicles is not permitted, and anyone involved in such transactions may face legal consequences.

Second, having a dealership license grants access to closed auctions, where dealers have the opportunity to acquire vehicles at discounted prices. This translates into higher profit margins when it comes to selling these cars to the public.

In short, a dealership license is essential for legally selling vehicles, purchasing vehicles, accessing closed auctions, specializing in specific segments, and complying with necessary regulations.

Types of Dealer Licenses in Maryland

New Car Dealership
Used Car Dealership
Wholesale Vehicle Dealership

Other types of licenses in Maryland include auto dismantling licenses, which are given to companies involved in dismantling wrecked, recovered, or inoperable vehicles. Scrap metal processor licenses are for businesses that primarily process vehicle scrap and sell parts.

Obtaining a specific type of license allows dealers to focus on their niche market and offer specialized customer service. By obtaining the proper license in Maryland, dealers can legally operate their business in the automotive industry and provide customers with high-quality vehicles.

Maryland Dealer License Requirements

In Maryland, obtaining a dealership license is a necessary step for anyone looking to start a car dealership.

To obtain a dealer license, applicants must meet certain criteria, such as having a business location with specific zoning requirements, submitting the required application forms, providing proof of liability insurance and compensation, and obtaining a motor vehicle dealer bond. The process also involves completing a franchise agreement and obtaining the necessary approvals from the Motor Vehicle Administration. Licensing fees vary depending on the type of dealership, and applications can be submitted online. Familiarizing yourself with the specific requirements and making sure all the necessary paperwork is in order is crucial to successfully obtaining a dealer license in Maryland.

Obtain a permanent business location

To obtain a car dealership license in Maryland, it is essential to have a permanent business location that meets certain requirements. This includes complying with local zoning ordinances, having a phone line with a publicly listed number, maintaining a display area for vehicles, having an office to keep business records, and having a permanent sign with the company’s name on it.These requirements ensure that the dealership is established and able to provide professional and reliable service to customers. By securing a permanent business location that meets these criteria, individuals can proceed with the process of applying for their car dealer license in Maryland.

Gather the Required Documents

When applying for a car dealer license in Maryland, it is important to gather all the necessary documents to ensure a smooth application process. Here is a list of the required documents:

Business Registration Letter: Obtain a business registration letter from the Maryland State Department of Assessments and Taxation to prove the legality of your dealership.
Workers‘ Compensation Coverage or Exemption: Provide proof of Workers’ Compensation coverage or exemption to ensure the safety and security of your employees.
Franchise Approval Letters: If you plan to operate a franchise dealership, include franchise approval letters from the respective manufacturers.
Auto Repair Installation Contract: If your dealership will also offer repair services, include a copy of the contract with an auto repair shop.
New Vehicle Certification Form: Submit a completed New Vehicle Certification form to declare compliance with Maryland Motor Vehicle Administration standards.

By gathering these required documents, you can speed up the application process and increase your chances of obtaining a car dealer license in Maryland.

Obtain a Trader’s License and Proof of Liability Insurance

When applying for your car dealership license, you will need to include a copy of your dealer’s license, which can be obtained from the circuit court in the jurisdiction where you plan to establish your dealership. If you have liability insurance that covers all the vehicles you sell, you should be able to get a form that certifies your insurance information. The same applies if you have workers’ compensation insurance.

Get Your Maryland Car Dealer Bond

Before they are granted their license, car dealerships in Maryland must obtain a surety bond. These bonds serve as a critical financial safeguard, offering protection to both the state and consumers, and ensuring that the car dealership is in full compliance with all necessary licensing requirements.

The bail bond amount for Maryland motor vehicle bonds is not fixed, but varies depending on the number of vehicles sold by the dealer in the previous year:

For used car dealers and wholesale dealerships, the bail bond amount can range from $15,000 to $150,000.
New car dealers, on the other hand, must get a bond ranging from $50,000 to $300,000.

To get the bond, dealers only need to pay a premium, which is usually a small percentage of the bail amount. This premium usually ranges from 1% to 3% of the total value of the bond. The accurate premium rate is determined by the bail bond company issuing the bond and takes into account several factors, including the dealership’s industry experience, credit score, financial history, and other relevant qualifications. This financial requirement ensures that concessionaires are financially responsible and able to meet their obligations, benefiting both the state and consumers.

Submit Your Dealer License Application

Once you have successfully fulfilled all the necessary prerequisites, you can proceed to complete your dealer license application. You can access all required application forms on the MVA website. In addition to these forms, you must gather the following supporting documents: