How to Get a Used Car Dealer’s License in Virginia: A Step-by-Step Process

Are you thinking of starting a used car dealership in Virginia? Understanding the state’s regulations is essential for operating legally and successfully.

In Virginia, you can sell up to five vehicles per year without a dealer’s license. Once you exceed that limit, you must obtain a used car dealer’s license.

This guide will walk you through each step of obtaining a dealer’s license, explain the different types of licenses, and show you how to source vehicles effectively for your dealership.

Key Takeaways

  • In Virginia, you can sell up to five vehicles per year without needing a dealer’s license. Selling six or more vehicles in a year requires obtaining a used car dealer’s license.
  • Virginia offers various dealer licenses, including Used Car Dealer, Wholesale Dealer, and Auction Dealer licenses, each with different requirements.
  • To qualify for a dealer’s license, you must have a permanent business location, complete a pre-licensing course, pass an exam, and meet other state requirements.
  • Auctions like Twin Cities Auctions offer an affordable way to acquire inventory for your dealership.

Step-by-Step Process to Obtain a Used Car Dealer’s License in Virginia

Step 1: Choose the Right Type of License

Virginia offers several types of dealer licenses. Each is designed for different business models and operations:

License TypeDescription
Used Car Dealer LicenseAllows you to sell used vehicles to the public.
Wholesale Dealer LicensePermits you to sell vehicles only to other licensed dealers.
Auto Auction Dealer LicenseAuthorizes you to operate a vehicle auction business.
Finance Dealer LicenseEnables you to offer financing for vehicle sales, including in-house financing options.

For most individuals aiming to sell used cars to the public, the Used Car Dealer License is the appropriate choice.

Step 2: Meet the Basic Requirements

To qualify for a used car dealer’s license in Virginia, you need to meet several basic requirements:

RequirementDescription
Business LocationYou must have a permanent, non-residential business location that complies with local zoning laws.
Business EntityYour dealership must be a legal entity, such as an LLC or corporation.
Surety BondYou must obtain a $50,000 auto dealer bond to operate legally in Virginia.
InsuranceYou must provide proof of liability insurance for each dealer plate issued.
Criminal Background CheckYou need to submit to a criminal history check. Felony convictions related to fraud or dishonesty may disqualify you.

Step 3: Complete the Dealer Application

Once you meet the basic requirements, you will need to complete the Dealer License Application form. This can be done through the Virginia Department of Motor Vehicles (DMV) website. You will need to provide:

  • Your business name and address
  • Proof of your legal business entity
  • Proof that your business location complies with local zoning laws
  • A list of business partners or officers, if applicable

Step 4: Submit Required Documents

Along with your completed application, submit the following documents to support your application:

DocumentDescription
Certificate of Zoning ComplianceTo confirm that your business location complies with local zoning laws.
Criminal History Check Data FormThis form is to be processed by the DMV for background verification.
Dealer Plate ApplicationFor obtaining dealer plates.
Application for Certificate of Qualification/Salesperson’s LicenseRequired for operating as a dealer.

Once your documents are submitted, the DMV will review your application.

Step 5: Pass the Dealer Exam

Virginia requires first-time used car dealers to pass a Dealer Exam. The exam is designed to ensure you are familiar with the state’s motor vehicle laws, including vehicle title transfers, warranties, and consumer protection regulations.

Before you take the exam, you must complete a two-day Dealer-Operator Pre-Licensing Course, which is available through the Virginia Independent Automobile Dealers Association (VIADA) or the Virginia Community College System.

Step 6: Business Operations and Compliance

Once you’ve passed the dealer exam and submitted your application, it’s crucial to ensure ongoing compliance with Virginia’s motor vehicle laws. This includes maintaining accurate records and complying with advertising laws.

Keep Accurate Records

As a licensed used car dealer in Virginia, you must keep detailed records of:

  • Sales records of vehicles sold
  • Customer contracts and financing agreements
  • Vehicle title transfers

These records must be available for inspection by the DMV or law enforcement upon request.

Comply with Advertising and Consumer Protection Laws

Virginia enforces strict regulations on how you advertise and sell vehicles. You must ensure that all advertisements are truthful and provide customers with necessary disclosures, such as:

  • Vehicle history (for used cars)
  • Warranty information (if applicable)
  • Sale price and financing terms

Failure to comply with these regulations could lead to fines or the revocation of your dealer’s license.

Step 7: Pay Fees and Obtain Your License

After completing all required steps, you will need to pay the necessary licensing fees. These fees may vary depending on the type of license you are applying for. For example:

Fee TypeAmount
Dealer License Application$200 – $300 (depending on business type)
Dealer Plates$75 per plate
Criminal Background Check Fee$15 – $25 per applicant

Once your fees are processed and your application is approved, you will receive your used car dealer’s license.

Why Auctions Are a Smart Choice for Vehicle Sales

When you’re building your inventory, using auctions can be a smart choice for sourcing vehicles. Twin Cities Auctions, based in Minnesota, is one such reputable auction house that offers a wide range of vehicles at competitive prices.

Key Benefits of Buying from Auctions:

  • Wide Selection: Auctions like Twin Cities Auctions offer a variety of vehicles, from low-budget cars to high-end models.
  • Competitive Pricing: Auctions often offer vehicles at prices below retail value, enabling dealers to maximize their profit margins.

Twin Cities Auctions: A Smart Vehicle Sourcing Choice

For those in the automotive industry, Twin Cities Auctions offers an excellent platform for sourcing quality vehicles at competitive prices. 

Whether you are just starting or expanding your business, this auction house provides transparency, competitive pricing, and a broad selection.

FeatureDescription
Inventory VarietyWide range of cars, trucks, and SUVs available
Competitive PricingBelow-market pricing allows for higher profit margins
Vehicle History ReportsDetailed history reports for every vehicle
Online BiddingConvenient online bidding options for dealers
Financing OptionsFinancing available to help with inventory purchases

Practical Tips for Sellers and Dealers

To ensure the success of your dealership, here are some practical tips to consider:

Know Your Market

Understanding local demand is essential. Research customer preferences in your area, whether it’s SUVs, sedans, or trucks. Tailoring your inventory to match local preferences can drive sales.

Provide Financing Options

Offering financing can significantly increase sales, as many buyers prefer to finance their vehicles. Partner with banks, credit unions, or offer in-house financing to attract more customers.

Maintain a Strong Online Presence

Build a professional website and stay active on social media to boost your dealership’s visibility. Use SEO techniques and online advertising to attract more potential buyers.

Conclusion

Getting a used car dealer’s license in Virginia is a crucial step in starting your dealership. By following the steps outlined above, you’ll ensure you meet all legal requirements. Additionally, sourcing inventory through auctions like Twin Cities Auctions can help you build a diverse and cost-effective inventory.

Twin Cities Auctions: No Dealer License? No Problem! 

Are you interested in buying or selling a car but worried about the complexities of needing a dealer license? Worry no more! At Twin Cities Auctions, we’ve removed the barriers, making our auctions open to everyone. 

Whether you’re a seasoned buyer or a first-time seller, our platform offers a welcoming environment where you can participate freely. Experience the ease and excitement of our next auction and discover just how simple and rewarding a car auction can be!

Looking for more options? Explore our comprehensive list of all available car auctions across the United States. Your next deal might be just a click away!

FAQ

What is the maximum number of vehicles you can sell without a dealer’s license in Virginia?

In Virginia, you can sell up to five vehicles per year without needing a dealer’s license. If you sell more than five vehicles in a year, you must obtain a used car dealer’s license.

How much does a used car dealer’s license cost in Virginia?

The total cost for a used car dealer’s license in Virginia varies, depending on the type of license and other factors. Refer to the Virginia DMV’s fee schedule for current fees.

Do I need a physical location to sell cars in Virginia?

Yes, your business must have a physical location that complies with local zoning laws. The location must be dedicated to vehicle sales.

How do I prepare for the Virginia dealer exam?

You must complete the required pre-licensing course and study Virginia’s motor vehicle laws, including title transfers, warranties, and consumer protection regulations.

What is a surety bond, and do I need one?

A surety bond is a financial guarantee that protects consumers if the dealership fails to meet its obligations. Yes, you will need to secure a $50,000 auto dealer bond to operate legally.

Can I sell cars at an auction without a dealer’s license in Virginia?

No, a dealer’s license is required to participate in vehicle auctions in Virginia, whether buying or selling cars.

What are the business location requirements for a used car dealership?

Your dealership must have a physical location that complies with local zoning laws, is not a residence, and has space to display at least 10 vehicles.

Why should I use auto auctions to source vehicles?

Auto auctions provide a cost-effective way to purchase a variety of vehicles, allowing you to diversify your inventory at competitive prices.

https://www.dmv.virginia.gov/businesses/dealer-services

https://www.dmv.virginia.gov/businesses/dealer-services/licensing

https://www.dmv.virginia.gov/forms

https://www.dmv.virginia.gov/businesses/dealer-services/exam-requirements

https://viada.org/pre-license

https://law.lis.virginia.gov/vacode/title46.2/chapter15

https://www.suretybonds.com/states/virginia/auto-dealer-bond