How to Get a Used Car Dealer’s License in Iowa

Looking to begin a used car dealership in Iowa? Getting a dealer’s license might feel overwhelming. Yet, with the correct details, you can breeze through the process. I’ll walk you through how to secure a used car dealer’s license in Iowa. This guide ensures you follow all legal requirements.

First, you might wonder, “Is a dealer’s license really necessary?” In Iowa, it usually is. If you’re selling, buying, exchanging, or even displaying cars to the public, a license is a must. The Iowa Department of Transportation demands this for anyone selling more than six cars in a year.

Next, let’s talk about your business site. It must have an office with a phone and be open at least 32 hours weekly. You also need a repair shop capable of fixing a vehicle and a big enough lot to show your cars and bikes. These spaces all have to meet certain size requirements too.

Key Takeaways

  • In Iowa, anyone selling more than six motor vehicles within a 12-month period must obtain a dealer’s license.
  • Your place of business must meet specific requirements, including an office, repair facility, and display area.
  • The dealer licensing course is an 8-hour mandatory requirement before submitting an application.
  • A $75,000 surety bond and minimum liability insurance of $100,000 are required.
  • Licensing fees include $70 for registration, $70 for the license, and $40 per dealer plate.

How to Get a Used Car Dealer’s License in Iowa: A Step by Step Guide

Here’s a quick look at getting a used car dealer’s license in Iowa:

  1. First, check if you really need a license. You do if you sell more than six cars in a year.
  2. Your business spot must have certain things. These include an office with a phone and set hours, a repair place, and an area to show cars.
  3. Take an 8-hour class called the Auto Dealer Pre-Licensing Education Class from the IIADA.
  4. You will also need a $75,000 surety bond and enough financial coverage.
  5. Get everything ready. This includes the application, a zoning letter, a franchise agreement if you have one, and be ready for an inspection.
  6. Finally, you have to submit your application, along with all the necessary documents and fees, to the Iowa Department of Transportation.

Restricted Dealer Licenses

In Iowa, some dealers can get a special license. This license is for those who sell vehicles in unique ways. Examples include selling vehicles through lease agreements only, handling repossessions, or working with fleet sales. It also covers selling cars at auctions or dealing with insurance claim vehicles.

Also, in Iowa, as in many states, it is generally illegal to rent or lease a dealer’s license. Renting or leasing a dealer license to operate a car dealership is considered a form of license fraud in many jurisdictions, including Iowa.

This practice undermines the regulatory framework designed to protect consumers and ensure that those engaging in the sale of vehicles meet certain standards of competency and responsibility.

Conditions for Restricted License

To get this type of license, the dealer must have a place of business in Iowa. This rule is a bit less strict than usual. They can use dealer plates but not get licenses for extra lots.

Dealers that focus on certain types of sales might qualify.

  • Selling vehicles through leases with a buying option
  • Dealing mainly with repossessed or contract-acquired vehicles
  • Focusing on fleet vehicle sales
  • Dealing vehicles only at auctions
  • Selling vehicles from damage claims or recovered thefts

Sticking to the license rules is key for these dealers in Iowa. The Iowa DOT watches them closely, making sure they follow all laws.

Leasing and Other License Types

In Iowa, if you’re leasing cars for over 60 days, you need a special leasing license. This is besides the standard used car dealer’s license. You have to apply for this license separately from the Department of Transportation.

Leasing License Requirements

For leasing cars more than 60 days in Iowa, a leasing license is needed. This is true no matter if you already have a used car dealer’s license. You must apply specifically for this leasing license.

Leasing LicenseRequired for leasing vehicles for more than 60 days in Iowa
Application ProcessSeparate from the used car dealer’s license application
ComplianceMust be obtained besides the standard used car dealer’s license

Licensing Requirements for Used Car Dealers in Iowa

In Iowa, you must have a dealer’s license to sell cars. This includes selling, trading, displaying, or brokering vehicles. If you sell more than six cars a year, you need this license. To get one, you must apply at the Iowa Department of Transportation.

Who Needs a Dealer’s License?

If you sell over six cars in Iowa within a year, you need a dealer’s license. Without it, you could face legal actions from the Bureau of Investigation & Identity Protection.

Minimum Requirements for Place of Business

Your dealership must meet some basic needs in Iowa. You need an office with a phone, open for 32 hours a week. Also, a repair shop big enough to fix a car and a space to display vehicles and bikes.

Documentation Needed for Iowa Used Car Dealer License Application

When applying for an Iowa used car dealer’s license, you need to submit certain documents.

Application Form

Start by filling out the Application for Motor Vehicle or Towable Recreational Vehicle Dealer License.


With the application form, you must pay the dealer license application fee. You also need to cover other owed fees.

Surety Bond

Used car dealers in Iowa require a $75,000 surety bond. You can get this bond from an insurance agent or an Iowa-licensed bonding company.

Zoning Letter

Obtain a zoning letter from the local zoning office. This letter confirms your business location meets all zoning rules.

Franchise Agreement

If you’re selling new vehicles, include a copy of your franchise agreement. This agreement is with the manufacturer or distributor.

On-Site Inspection

Before you get your license, schedule an on-site inspection with the Bureau of Investigation & Identity Protection. This step checks if your business location follows the rules.

Additional Dealer License Requirements

On top of what’s needed for the dealer license, Iowa demands a few more things. These have to be met by those wanting to sell used cars.

Used Motor Vehicle Dealer Education Class

All those applying for a dealer’s license must join an 8-hour class. It’s set up by the Iowa Independent Automobile Dealers Association (IIADA). This course teaches future used car sellers about the state’s rules and how to run a great business.

Corporation Compliance

The person applying must ensure their company follows all local laws for setting up. This means they must register correctly, get all needed permits and licenses, and stay updated on Iowa’s laws.

Financial Liability Coverage

Dealerships need an insurance policy that offers at least $100,000 for one person’s injuries or death, $300,000 for more than one person, and $50,000 for damage to others’ property. This protection covers the business, its customers, and any others from sudden big financial hits.


Getting a used car dealer’s license in Iowa has several steps. First, you have to meet the basic needs for your business. Then, you must complete some paperwork and take some classes. If you follow this guide, you’ll be able to open a used car dealership in Iowa.

Starting or growing a used car business means understanding Iowa’s licensing process. Things like the size of your lot and required education are important. They make sure your business meets the state’s rules on selling used cars. By keeping up with the rules, you can make your business successful in Iowa.

Starting to get your license is a big step. The advice in this article is a great starting point. But, it’s smart to talk to local experts and lawyers too. They can give you current and detailed advice. With good prep, you can get through the license process well. Then, you can make your used car dealership a success.

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Who needs a used car dealer’s license in Iowa?

In Iowa, needing a vehicle dealers license depends on your activities. If you are selling, exchanging, or offering motor vehicles to the public, you must have a license. This includes activities like conducting auctions or acting as a sale agent. It also applies if you accept vehicles for consignment.

If you sell more than six vehicles a year, the law sees you as running a business. Therefore, you must get a dealer’s license from the Iowa Department of Transportation.

What are the minimum requirements for a used car dealer’s place of business in Iowa?

Your business must have an office with a phone, open at least 32 hours weekly from Monday to Friday. Besides, you must have a repair shop that can fix a vehicle and a space to show vehicles. This space must be at least 18 feet by 30 feet for most vehicles and 10 feet by 15 feet for motorcycles.

What documentation is needed to apply for a used car dealer’s license in Iowa?

To start the application process, you’ll need a few key documents. These include the License Application, required fees, a $75,000 bond, a zoning approval, and if you’re a new car dealer, a franchise agreement. You also have to get your place checked out with an inspection.

Furnish a $75,000 bond along with the other docs. Applying for a franchise means you should submit the franchise agreement. Also, get your business place inspected.

Are there any additional requirements for obtaining a used car dealer’s license in Iowa?

There are a few more rules to follow. Be ready to attend an 8-hour Pre-Licensing Class on selling vehicles. Make sure your company meets the state law for setting up a corporation. Also, get the required financial liability coverage.

Don’t forget about the 8-hour class if you’re applying for a used car dealer’s license. Your company must meet all state corporation laws too. Plus, you need to have the right business insurance.

What is a restricted dealer license in Iowa?

A restricted license is for dealers that work with specific types of cars. These include cars leased for over 60 days, repossessed cars, fleet cars, or cars sold at auctions.

If you are this kind of dealer, you must be located in Iowa but don’t need a permanent business location. You also can’t have an extension to your license for more lots.

Are there any other license types required in Iowa for used car dealers?

Yes, Iowa asks for a special leasing license too. This is for dealers who lease cars for more than 60 days. It’s a different application process through the Iowa Department of Transportation.

Remember, leasing cars in Iowa for more than 60 days needs a special leasing license. You have to apply for this through the Iowa Department of Transportation.