How to Get a Used Car Dealers License in South Dakota

Looking to become a licensed used car dealer in South Dakota? The path might be challenging, but we’re here to help. In this guide, you’ll learn every step needed to get your used car dealer license in South Dakota. It’s easier than you think.

Also, it is important to note that in South Dakota, it is illegal to rent a car dealer license. The state requires individuals or businesses selling vehicles to have a proper dealer license, and this includes adhering to strict regulations. Renting or borrowing a dealer license from another party is not permitted and can result in severe legal consequences.

What makes getting a used car dealer license unique in South Dakota? And what about the regulations for your business location? We will cover all these necessary steps for you. By the end, you’ll know how to smoothly start and run your used car dealership in the exciting Mount Rushmore State.

Key Takeaways

  • The Motor Vehicles Division in South Dakota manages all dealer licenses, including used car dealers.
  • Renting or borrowing a dealer license from another party is not permitted and can result in severe legal consequences.
  • Dealer licenses in South Dakota are issued for five years but must be renewed annually.
  • New dealers must have a repair area on-site and comply with local zoning and building codes.
  • Liability insurance of at least $300,000 is required for vehicle, used vehicle, and motorcycle dealers.
  • Surety bond amounts are $25,000 for new and used dealers, and $5,000 for motorcycles and snowmobiles.

5 Steps to Obtaining Your South Dakota Dealer License

1. Understanding the Types of Dealer Licenses in South Dakota

Starting a vehicle dealership in South Dakota means picking the right dealer license. The Motor Vehicles Division oversees many license categories. These include vehicle dealer, used vehicle dealer, and many others.

The process is the same for all, but each type has different requirements.

Vehicle Dealer License

A vehicle dealer license lets you sell both new and used vehicles, such as cars, trucks, and SUVs. It costs $300. You also need to have insurance coverage of at least $300,000.

Used Vehicle Dealer License

If you only want to sell pre-owned vehicles, the used vehicle dealer license is for you. It also costs $300 and requires $300,000 in insurance.

Mobile Home Dealer License

For selling mobile homes, you’ll need a special license that costs $300.

Motorcycle Dealer License

Love motorcycles? You need a $250 license and $300,000 in insurance to sell them.

Snowmobile and Boat Dealer License

Dealing in snowmobiles and boats? There’s a $250 license just for that.

Trailer Dealer License

If you’re selling trailers, a $125 license is needed.

Emergency Vehicle Dealer License

Want to sell emergency vehicles like police cars or ambulances? It requires a $300 license.

All South Dakota dealer licenses need yearly renewal. Even though they’re first issued for five years. By knowing about the different licenses, you can pick the right one for your dealership.

The application process remains consistent across these categories.

2. Registering Your Business in South Dakota

Want to start a used car dealership in South Dakota? You’ll need to handle some important steps first. This involves getting an Employer Identification Number (EIN) from the IRS. It also means registering with the SD Division of Business Services. And you must get a local business license as well.

Obtaining an Employer Identification Number (EIN)

Getting an EIN is the first task for your South Dakota business. This is a nine-digit number needed for tax and business identification. You apply for it online, by mail, or by fax with the IRS.

Registering with the SD Division of Business Services

After the EIN, you need to register your dealership with the SD Division of Business Services. You can do this online, by mail, or in person. You’ll give information like your business name, legal structure, and who owns it. This step ensures the state knows about your business and lets you work legally.

Securing a Local Business License

Aside from state registrations, you might also need a local business license. This depends on where your dealership is in South Dakota. Be sure to check with local officials for the right steps and costs. Having this license shows you follow all local laws.

3. Establishing a Compliant Business Location

Before you can get a South Dakota dealer license, you must have the right business spot. The state needs your place to fit certain rules to get a license. Making sure your spot meets these rules is really important.

Accessibility and Display Lot Requirements

To start, your place needs a building people can get into easily. This building should show when it’s open. Also, there needs to be enough space outside to show at least five cars. All this is key for the right business location requirements, and for making a good impression on customers.

Office and Record-Keeping Requirements

A dealership in South Dakota must have a special room for keeping all its paperwork and books. This keeps everything in order. Plus, it helps your business follow the rules closely.

Repair Area and Zoning Approval Requirements

If your business is new, it should have a place for fixing cars. Also, all dealers there must get a document that says it’s okay to do business in that area. Getting this document means you’re in the right place to work as a dealer.

If you meet all the accessibility and display lot requirements, office and record-keeping requirements, and repair area and zoning approval requirements, you’re on your way. Your dealership is set to do well in South Dakota.

4. Insurance and Bond Requirements

Dealers applying for vehicle, used vehicle, or motorcycle licenses must have liability insurance coverage of at least $300,000. The amount of your down payment will constitute a fraction of the entire value, with the cost based on your financial status.

Keeping Records and Complying with Regulations

As a used car dealer in South Dakota, it’s essential to keep and organize all business records. You must follow the state’s regulations. For example, you need to have correct paperwork, meet record-keeping standards, and comply with laws like South Dakota Codified Law 32-6B-7.

Keeping up with South Dakota’s laws for used car dealers is key. This knowledge helps you keep your license and run your business smoothly.

Bond TypeBond AmountAnnual Premium
Motorcycle or Snowmobile Dealer Bond$5,000Starts at $50
Trailer Dealer or Emergency Vehicle Dealer Bond$10,000Starts at $100
Boat Dealer Bond$20,000Starts at $140
Motor Vehicle Dealer, Mobile/Manufactured Home Dealer, or Final State Manufacturer Dealer Bond$25,000Starts at $175

5. Application and Fee Submission

Finally, prepare your payment and submit your dealer license application along with necessary documents like your business location’s lease and, if applicable, a franchise agreement for new vehicles. The fee structure is as follows:

  • Vehicle, used vehicle, emergency vehicle, and mobile home dealers: $300
  • Motorcycle and boat dealers: $250
  • Snowmobile dealers: $150
  • Trailer dealers: $125

Separate applications are required for each license type, and a payment of $84 per plate is needed. Remember, licenses in South Dakota must be renewed annually, despite being issued for a five-year term.

Maintaining and Renewing Your Dealer License

Annual Renewal Process

In South Dakota, remember to renew your used car dealer license annually. Even though they’re given for five years, you need to renew every year. This step is crucial for staying compliant with state rules.


This guide covered how to get a used car dealer’s license in South Dakota. It explained different license types and how to register your business. It also detailed setting up a compliant location, getting insurance and bonds, and staying in compliance. By following these steps, you can start and run your dealership.

Keep up with any rule changes to keep your business in good shape. The used car dealer scene in South Dakota is full of promise. But, getting a license takes careful work. Ready yourself well, and your dealership can do great in this lively market.

Use this advice to earn your license and open a successful used car dealership in South Dakota. Good luck with your new business adventure!

Gear Up for Growth with Twin Cities Auctions

Set the foundation for your car dealership with Twin Cities Auctions! Proceed with confidence through the licensing process aided by our skilled team. Suitable for both starting entrepreneurs and expanding dealerships, Twin Cities Auctions provides a rich inventory of quality vehicles. Work with us to gear up for significant growth in your business!


What are the different types of dealer licenses available in South Dakota?

South Dakota’s Motor Vehicles Division has many dealer licenses. These include Vehicle Dealer, Used Vehicle Dealer Only, Mobile Home Dealer, Motorcycle Dealer, and others.

What are the requirements to obtain a business permit in South Dakota?

To start a dealership in South Dakota, you need an EIN from the IRS. You also must register with South Dakota’s Division of Business Services. Additionally, you need a local business license.

What are the location requirements for a used car dealership in South Dakota?

Your dealership must have an enclosed structure that’s easy for the public to reach. It should have listed hours and space for five cars. You’ll need an office and a phone number. Plus, a repair area and compliance with local zoning are a must. You should get a zoning approval letter too.

What insurance and bond requirements are there for used car dealers in South Dakota?

Used car dealers in South Dakota must have at least $300,000 liability coverage. They also need a $25,000 surety bond for most vehicles. For motorcycles and snowmobiles, a $5,000 bond is required.

What documents and fees are required to apply for a used car dealer license in South Dakota?

You’ll need your business’s lease, plus a franchise agreement if you sell new cars. Along with location and business registration, fees range from $125 to $300. You’ll pay $84 per plate too.

How often do I need to renew my used car dealer license in South Dakota?

In South Dakota, renew your license yearly, not every five years when it’s issued. Keep all business records and follow state rules.