How to Get a Used Car Dealers License in Minnesota

Selling Procedures

Are you eager to kick start your auto dealer dream in Minnesota? Getting your used car dealers license seems complex. But, with the right steps, you can make the process smooth. You’ll soon have your dealership up and running in the state known for its many lakes.

Key Takeaways

  • In Minnesota, vehicle dealer licenses are required for individuals or businesses selling more than 5 vehicles annually.
  • The licensing process aims to protect consumers from potential fraud and ensure vehicle safety standards.
  • Establishing a physical location with a display area for at least 5 vehicles is a crucial first step.
  • Obtaining a $50,000 auto dealer surety bond and maintaining liability insurance are essential requirements.
  • Submitting the necessary documentation, including zoning verification and worker’s compensation compliance, is key to a successful application.

Getting a Car Dealers License in Minnesota: A Step by Step Guide

Step 1: Understanding Auto Dealer Licenses in Minnesota

The Minnesota Department of Public Safety (DPS) issues different types of auto dealer licenses. These are meant for the many sides of the car market in the state. They are made to fit what each dealer’s business does, making sure there are clear rules to follow.

Types of Auto Dealer Licenses

In Minnesota, you can get various auto dealer licenses. This includes licenses for new and used car dealers, wholesalers, brokers, and others. The DPS uses these different licenses to watch over the industry well.

Used Vehicle Dealer

A used vehicle dealer is a business licensed to sell second-hand cars to the public. They work only with previous car models and not new ones. To run a used car business in Minnesota, dealers must follow the state’s rules and get a proper license.

Step 2: Establish a Physical Location

Finding the right location is crucial for your Minnesota auto dealership. The Minnesota Department of Public Safety (DPS) will assess your chosen site as part of the licensing process.

To help you choose a compliant location, the DPS offers a commercial location checklist [link to checklist here]. Here’s a quick rundown of some key requirements:

  • Vehicle Display Area: Your dealership needs a designated space to showcase at least 5 vehicles.
  • Signage: Clear and readable signage is mandatory to identify your business.
  • Operating Hours: Publicly display your dealership’s hours of operation for customer convenience.
  • Zoning Approval: Ensure your chosen location has the proper zoning permits from your local authorities.

Step 3: Secure Limited Liability Insurance and an Auto Dealer Bond

Insurance and Bonding Requirements

  • Garage Liability Insurance: You’ll need liability insurance to cover any injuries or property damage caused while a vehicle is on your lot. The minimum coverage required is $30,000 per person, $60,000 per accident for bodily injury, and $10,000 for property damage.
  • Auto Dealer Bond: An auto dealer bond is a financial guarantee that protects your customers in case of fraud or non-performance. You’ll need a minimum bond amount of $50,000. This cost is typically a portion of the total bond value and is determined by your creditworthiness and financial background. If you plan to sell boats, snowmobiles, small horse trailers, or mopeds, you may need an additional bond amount on top of the $50,000 minimum.

To get a vehicle dealer license in the state of Minnesota, you must follow strict rules. The state’s Department of Public Safety has these rules in place. They make sure only honest and qualified people can sell cars. This process protects buyers from scams and poor quality cars. It also makes sure the cars meet safety rules. Additionally, it is important to note that renting out a vehicle dealer license is illegal, reinforcing the integrity of the licensing system.

Minnesota Statutes and Rules Governing Dealer Licensing

Car dealers must follow a key law in Minnesota, Chapter 168.27. This law covers everything dealers need to know. It talks about getting a license, keeping records, and protecting buyers. Dealers who follow this law can run their businesses the right way.

Importantly, individuals are permitted to sell up to 5 cars per year without a dealer license. However, selling more than 6 cars annually categorizes you as a business under this law, requiring you to obtain a dealer license and remit sales tax on the additional vehicles sold according to the Minnesota Department of Public Safety.

Step 5: Compile Additional Documents

Along with your application, you’ll need to submit a few extra documents:

  • Proof of Worker’s Compensation Compliance: A document demonstrating that you adhere to Minnesota’s Worker’s Compensation Law, which provides financial support to employees injured on the job.
  • Property Lease Verification: Documentation verifying that you have a lease agreement for the property where you’ll operate your dealership.
  • Franchise Agreement (New Dealers Only): If you’re a new dealer selling new vehicles under a specific brand, you’ll need to include a copy of your franchise agreement.

Step 6: Fees and Costs Associated with the Licensing Process

Getting a used car dealer’s license in Minnesota means paying different fees. You’ll need to pay these costs as you go through the steps set by the Minnesota DPS.

License Application Fees

To apply for a license, auto dealers need to pay an administrative fee of $100. Then there’s a $150 application fee. They also pay $12.50 for each vehicle they plan to sell. All these fees go with the application and any needed documents.

Additional Fees for Plates and Stickers

There are more costs on top of the application fees. Dealers in Minnesota must pay for plates and stickers. It’s $14.50 for a duplicate plate and $11 for each sticker. These costs make sure dealers have the paperwork needed for their cars and follow the rules.

Knowing about the fees for a used car dealer’s license helps you plan your budget. This way, the licensing process can go smoothly.

Conclusion

To get a used car dealer’s license in Minnesota, you must follow several steps. This process needs careful planning and detailed attention. You’ll have to set up a physical location, get the required bond and insurance, and understand all legal demands.

Knowing the details to learn how to get licensed sets individuals in Minnesota on a path to success in the used car industry. It involves having the right documents, following state rules, and making sure you meet all criteria. This way, people can start a thriving and lawful used car dealership.

The journey to a used car dealer’s license in Minnesota might look tough, but it’s doable with proper help and knowledge. By keeping up with information and being ready to act, future used car dealers will feel more confident. They can begin their automotive sales career on the right foot.

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Twin Cities Auctions isn’t just an auction; it’s your partner in success, providing you with the inventory and support to thrive in the competitive auto sales industry. Don’t miss out on the action! Join us at Twin Cities Auctions where you’ll find a wide selection of vehicles to cater to all your dealership needs. 

FAQ

What types of auto dealer licenses are available in Minnesota?

The Minnesota Department of Public Safety (DPS) gives out different types of auto dealer licenses. These match each dealer’s specific business type. The licenses reflect the varied roles in the state’s auto industry. For example, a “Used Vehicle Dealer” specializes in selling or trading used cars to the public.

What is the definition of a “Used Vehicle Dealer” in Minnesota?

In Minnesota, a “Used Vehicle Dealer” is a business licensed to sell used cars. They do not sell new cars from manufacturers. Instead, they sell or trade pre-owned vehicles.

Getting a vehicle dealer license in Minnesota has strict rules and requirements. The Minnesota Department of Public Safety (DPS) sets these. Dealers must obey Chapter 168.27 of Minnesota’s Statutes. This chapter has the laws for dealer licensing in the state.

What fees are associated with the used car dealer licensing process in Minnesota?

When applying for a dealer license in Minnesota, there are several fees. These include a $100 administrative fee and a $150 application fee. Also, there’s a cost of $12.50 per vehicle, $14.50 per duplicate plate, and $11 per sticker. Submit these fees with your application and documents.