Starting a used car dealership in Washington can be a rewarding and profitable venture. However, before you can begin selling vehicles, you need to ensure that you are properly licensed and comply with state regulations.
In Washington, you can sell up to four vehicles per year without a dealer’s license. Selling five or more vehicles in a year requires obtaining a used car dealer’s license.
This guide will walk you through the steps to obtain a dealer’s license, highlight key dealer laws, and explain how auto auctions like Twin Cities Auctions can be a valuable resource for sourcing inventory.
Key Takeaways
- In Washington, you can sell up to four vehicles per year without a dealer’s license. Selling five or more vehicles in a year requires obtaining a used car dealer’s license.
- Washington offers various dealer licenses, including Used Car Dealer, Wholesale Dealer, and Auction Dealer Licenses, each suited to different business models.
- The process for obtaining a dealer’s license includes completing the application, submitting required documents, passing a dealer exam, and paying necessary fees.
- Auto auctions like Twin Cities Auctions provide dealers with an effective and cost-efficient way to acquire inventory.
Step-by-Step Process to Obtain a Used Car Dealer’s License in Washington
Step 1: Choose the Right Type of License
Before applying for a dealer’s license, you need to determine which license is suitable for your business. Washington offers the following types:
| License Type | Description |
| Used Car Dealer License | Allows the sale of used vehicles directly to the public. |
| Wholesale Dealer License | Enables the sale of vehicles exclusively to other licensed dealers, not to the public. |
| Auction Dealer License | Authorizes the operation of a vehicle auction business. |
| Finance Car Dealer License | Allows the financing of vehicle sales, a great option for those offering in-house financing to buyers. |
For most businesses aiming to sell directly to consumers, 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 Washington, you need to meet several basic requirements:
| Requirement | Description |
| Business Location | You must have a permanent business location that complies with local zoning laws and is dedicated to vehicle sales. |
| Business Entity | You must form a legal business entity such as an LLC or corporation. |
| Surety Bond | A $30,000 surety bond is required to ensure that your dealership meets its obligations to customers. |
| Criminal Background Check | Applicants must pass a criminal background check. Felony convictions related to fraud or dishonesty may disqualify you. |
Step 3: Complete the Dealer License Application
Once you meet the basic requirements, complete the Dealer License Application form. This can be found on the Washington State Department of Licensing (DOL) website. The application will ask for the following information:
- Your business name, address, and contact information
- Proof of your legal business entity (LLC, corporation, etc.)
- Proof of compliance with local zoning laws for your business location
- Information about any business partners or officers
Step 4: Submit Required Documents
Along with the completed application form, you will need to submit several documents to support your application, including:
| Document | Description |
| Proof of Business Location | A copy of your lease agreement or proof of property ownership. |
| Surety Bond | Submit proof of the $30,000 surety bond required for used car dealers in Washington. |
| Criminal Background Check | Provide the results of your criminal background check. |
| Business Registration | A copy of your business registration or incorporation documents. |
After submitting the required documents, the Washington DOL will review your application.
Step 5: Pass the Dealer Exam
Washington requires first-time used car dealers to pass a Dealer Exam. To ensure that you are familiar with the state’s motor vehicle laws, including vehicle title transfers, warranties, and consumer protection regulations, you must complete an eight-hour New Dealer Education Course offered by the Washington State Independent Automobile Dealers Association (WSIADA) or the Washington Community College System. After completing this course, you must pass a written exam.
Step 6: Maintain Compliance with Dealer Laws
Once you obtain your dealer’s license, it’s crucial to stay in compliance with Washington’s motor vehicle laws. Dealers must:
- Maintain Records: Keep accurate records of all sales, title transfers, and financial agreements for a minimum of three years.
- Provide Disclosures: Ensure that all required disclosures are made to consumers during sales, including vehicle history and warranty information.
- Adhere to Advertising Laws: Follow state guidelines regarding the advertisement of vehicle prices, features, and warranties.
Failure to comply with these regulations can result in penalties, fines, or even the revocation of your dealer’s license.
Step 7: Pay Fees and Obtain Your License
After passing the exam and submitting all required documents, you must pay the necessary fees. These fees include:
| Fee Type | Amount |
| Dealer License Application | $975 (varies depending on business type) |
| Dealer Plates | $75 per plate |
| Criminal Background Check Fee | $42 per applicant |
Once your payment is processed and your application is approved, you will be issued 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.
- Transparency: Auctions provide full vehicle history reports, so you know exactly what you’re buying.
- Convenient Bidding: Many auctions offer online bidding for your convenience, making it easier to source vehicles without being physically present.
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.
| Feature | Description |
| Inventory Variety | Wide range of cars, trucks, and SUVs available |
| Competitive Pricing | Below-market pricing allows for higher profit margins |
| Vehicle History Reports | Detailed history reports for every vehicle |
| Online Bidding | Convenient online bidding options for dealers |
| Financing Options | Financing available to help with inventory purchases |
Practical Tips for Sellers and Dealers
To ensure your dealership’s success in Washington, here are some practical tips:
Know Your Market
Research your local market to understand the demand for specific vehicle types. For example, in urban areas, compact cars may be in high demand, while rural areas may have more interest in trucks and SUVs.
Offer Financing Options
Many customers prefer financing when purchasing vehicles. Offering financing options through a bank, credit union, or even in-house financing can help you attract more buyers and close more deals.
Build an Online Presence
A strong online presence can help drive traffic to your dealership. Consider creating a professional website, maintaining active social media profiles, and optimizing your online listings for search engines.
Conclusion
Obtaining a used car dealer’s license in Washington is essential for anyone looking to sell vehicles professionally. By following the steps outlined in this guide and complying with state laws, you can operate your dealership legally and successfully. Additionally, sourcing inventory through auto auctions like Twin Cities Auctions is a great way to diversify your inventory and keep costs down.
Find Your Next Ride Online at Twin Cities Auctions—No Dealer License Required
Searching for your next vehicle? Twin Cities Auctions offers an online, transparent car auction experience that’s accessible to everyone, no dealer license needed. Browse and bid on a diverse selection of quality vehicles from the comfort of your home.
Whether you’re a first-time buyer or an experienced trader, our clear, honest bidding process ensures you can make informed decisions in a supportive environment. Join our next online auction and discover how effortless and enjoyable finding your next car can be with Twin Cities Auctions!
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 Washington?
In Washington, you can sell up to four vehicles per year without needing a dealer’s license. If you sell five or more vehicles in a year, you must obtain a used car dealer’s license.
How much does a used car dealer’s license cost in Washington?
The total cost varies based on the type of license and associated fees. Typically, the dealer license application costs around $975, with additional fees for dealer plates and background checks.
Do I need a physical location to sell cars in Washington?
Yes, your business must have a physical location that complies with local zoning laws and is dedicated to vehicle sales.
How do I prepare for the Washington dealer exam?
Complete the required eight-hour New Dealer Education Course, then review the DMV’s study materials to prepare for the dealer exam. The exam covers motor vehicle laws, warranties, and consumer protection regulations.
What is a surety bond, and do I need one?
A surety bond is a financial guarantee required for used car dealers in Washington. The bond amount is typically $30,000 and ensures that your dealership will meet its obligations to customers.
Can I sell cars at an auction without a dealer’s license in Washington?
No, a dealer’s license is required to participate in vehicle auctions in Washington, whether you are buying or selling cars.
What are the business location requirements for a used car dealership?
Your dealership must have a permanent, physical location that complies with local zoning laws and has enough space to display at least 10 vehicles.
Why should I use auto auctions to source vehicles?
Auto auctions allow you to purchase vehicles at lower prices, giving you access to a wide range of vehicles and helping you quickly build your inventory.
Source Links
https://www.dol.wa.gov/professional-licenses/vehicle-dealers
https://www.dol.wa.gov/professional-licenses/vehicle-dealers/get-your-license-vehicle-dealers
https://www.dol.wa.gov/business/vehicledealer/forms/420040.pdf
https://www.wsiada.com/education/new-dealer-education
https://www.acvauctions.com/blog/how-to-get-a-dealer-license-in-washington
https://www.jwsuretybonds.com/states/washington/auto-dealer-license